Contents · • 1stArs Independent Katowice IFF • 47th Pesaro International Film Archive • Museum of Modern Art (aka MoMA) • 2nd Saint Petersburg International Film Festival

1ASIA CAPITAL PLC • ANNUAL REPORT 2010/11

ContentsPerformance 2Chairman’s Statement 4Board of Directors 12Chief Executive Officers 16Asia Capital Senior Management 17Group Management 18Corporate Structure 22Management Discussion & Analysis 28Corporate Social Responsibility 50Corporate Governance 68Risk Management 76Annual Report of the Board of Directors on the Affairs of the Company 80Statement of Directors’ Responsibilities 85Remuneration Committee Report 86Chief Executive Officer’s and Chief Financial Officer’s Responsibility Statement 87Audit Committee Report 88Independent Auditors’ Report 92Income Statements 93Balance Sheets 94Cash Flow Statements 96Statements of Changes in Equity 98Notes to the Financial Statements 100Segment Reporting 146Share Information 147Ten Year Summary 150Corporate Information Inner Back Cover

ASIA CAPITAL PLC • ANNUAL REPORT 2010/112

PerformanceA Quantum Leap

“At the start of 2010 we aligned our business behind three clear priorities: consolidating on the change from previous year, focusing on a quantum leap and expanding our business portfolio.�

But it is not only the increases in our bottom line that are notable.� Our value strategy continues to be very successful, clearly demonstrating the benefit of long-term brand investment in order to build equity, relevance and resilience.�.�.�”

GROUP PERFORMANCE

Revenue60%

10/1109/1008/0907/08

0.96

Rs. B

n.

1.80

1.33

2.12

RONA64%

(60)

%

(88)

61

100

10/1109/1008/0907/08

EPS349%

3.92

Rs.

4.04

2.00

8.98

10/1109/1008/0907/08

Pro�t After Tax 395%

(0.3

7)

Rs. B

n.

(0.3

8)

0.23

1.15

10/1109/1008/0907/08

MarketCapitalisation576%

1.13

Rs.B

n.

0.63 1.

43

9.66

10/1109/1008/0907/08


GROUP STRUCTURE

“In 2010 we delivered an outstanding financial performance and transformed our platform for future growth.�”

Asia Capital PLC

100%Asia Wealth

Management

99.99%Asia Securities

99.87%Asia Asset

Finance

100%Asia Capital

Technologies

100%Asia Fort

Sri Lanka DirectInvestment

Fund

100%Asia Leisure

Holdings

100%Asia Leisure

100%Asia Growth

Fund 1

“Asia Capital PLC has joined the Billion Rupee Club by recording a Rs.�1.�151 billion net profit after tax for the 12 months ending 31.�03.�2011.� This is an increase of over 395% compared to the audited results of 2010”

A Quantum Leap

Chairman’sStatement



I wish to welcome the shareholders to the 18th Annual General Meeting of Asia Capital PLC.�,

It is a privilege to announce the audited accounts for 2011, and I am happy to announce that Asia Capital PLC has joined the Billion Rupee Club by recording a Rs.�1.�151 billion net profit after tax for the 12 months ending 31.�03.�2011.� This is an increase of over 395% compared to the audited results of 2010.� Approximately 43% of the profit came from capital gains and short term investments in the secondary market held by Asia Capital PLC.�, These profits are indicative of the true wealth of Asia Capital PLC as an investment company.�

As an investment company, we believe that the true purpose of holding an asset is the assessment of whether one believes whether it is under-valued or over-valued in the market and its near term prospects.� The valuation is a function of the performance of the company, the potential and the agglomeration of the assets that it holds.� I am also pleased to

note that the share price of the company rose from Rs.�13.�25 to Rs.�87.�50 during the period under review.�

I wish to record my appreciation for the various management teams of the group whose performance resulted in an increase of 60% in the turnover from Rs.�1.�33 billion to Rs.�2.�12 billion.� Much of that increase was due to the booming market conditions and the performance of the stockbroking and

investment banking division which saw its proportionate turnover go up by over 100%.� There were also significant increases in the turnover in the Insurance segment and the Leisure segment which contributed to this dramatic increase.� In terms of profitability, over 50% of the profits was from the investment banking and stock broking companies.�

From time to time when we feel that the markets are buoyant and the valuations not un-attractive, and we find a suitable buyer who would treasure the asset and take care of its human resources, we shall dispose some of our investments to realize a capital gain.� This will continue to be one of the principal activities of Asia Capital to create shareholder wealth.�

A significant post balance sheet development was that all of Asia Capital’s holdings in Asian Alliance were sold in September 2011.� The sale was due to several reasons.� First, we were deeply concerned about the near term equity valuations due to the anticipated global downturn and we were of the view

that the current valuations will not be seen for many years.� Second, we were more concerned about certain aspects of the management of the Company.� We felt that although successful, Asian Alliance was only dominant in a relatively narrow segment of the insurance market which could be adversely impacted by potentially strong competitor action.� Despite our repeated attempts to persuade the management of that company to broadbase its clients to what we described

As an investment company, we believe that the true purpose of holding an asset is the assessment of whether one believes whether it is under-valued or over-valued in the market and its near term prospects

“ “


Chairman’s StatementA Quantum Leap

as the lumpen proletariat in Marxist terms rather than the “petite bourgeois” and our advice to gain greater profitability by operating at the bottom of the pyramid were ignored and we were not disposed towards battling the instincts of our management teams.�

With regard to investments in equity, the IBSL made a determination that the insurance funds should not hold greater than 5% of the technical reserve/long term insurance fund, or 5% of the stated capital of the company whichever is lower, destroying a significant tool of the investment manager to maximize investment returns.� The combination of these three factors persuaded us that it was better to dispose of our Asian Alliance Investment now .� On the short term, we felt that we have maximized our return and the long-term advantages of holding the investment were not attractive.� I am very proud that our stake was valued significantly more at the point of sale than when we took over at due to the value additions by the new Management Team of Asia Capital.� Consequently, Asia Capital PLC has a large cash reserve and at the time of writing this review, we are contemplating alternative ways of returning the money to the shareholders.� This would probably be in the form of a special dividend.�

We used the proceeds of the Asian Alliance Insurance shares sale to settle bank liabilities.� We also made additional investments in Asia Leisure (Private) Limited, as we believe that the tourism industry is very well poised due to the Government’s deep commitment to develop that industry.� With Asia Leisure, we already have an exposure to that industry.� We wish to build on these strengths and further invest in room capacity.�

Secondly, we wish to invest in the Entertainment industry through our company Asia Digital Entertainment.� We have already invested and made an English movie for global distribution.� We have also produced a Sinhala film viz: “Flying Fish” which has received critical acclaim internationally evidenced by several international awards and culminating with

the film being exhibited at the 5th Cinema Digital International Film Festival in Korea and being awarded the “Blue Chameleon Award”.�

“Flying Fish” was exhibited in the competition category at the following film festivals.�

• RotterdamInternationalFilmFestival

• SeattleInternationalFilmFestival

• 1stArsIndependentKatowiceIFF

• 47thPesaroInternationalFilmArchive

• MuseumofModernArt(akaMoMA)

• 2ndSaintPetersburgInternationalFilmFestival(akaKinoforum)

• 12thTokyoFILMeXIFFJapan

• 34th3ContinentsIFF,France

Awards:

• BestDirectorAward–St.PetersburgIFFKINFORUM–Russia

• 5thCinDiIFF(akaCinemaDigitalInternationalFilmFestival–South Korea

• SpecialJuryMentionforRedChameleonAward-5thCinDiIFF(akaCinemaDigitalInternationalFilmFestival–SouthKorea

• Critic’sChoiceAward-NewJerseySouthAsianFilmFestival-USA

A press conference was held by Asia Digital Entertainment (Pvt) Ltd.�, to mark the launch of the Sri Lanka’s premier entertainment film magazine “SHOWTIME” on 7th October 2011, with 75 printed and electronic media members present.�

Asia Digital has commenced a project working together with Real Image a subsidiary of Gemini Laboratories in India to digitalize film distribution, convert film theatres to digital distribution and establish a dominant position in the distribution of Hollywood, Indian and local content.� In the case of local content, Asia Digital has entered the business

“We are contemplating alternative ways of returning the money to the shareholders.� This would probably be in the form of a special dividend”


of renting digital cameras to the Sri Lankan industry, and we believe that gradually in the next two years all production of local movie content will shift towards digital technologies, ie: digital capture, digital editing and digital distribution, making the industry cost structure attractive for new investments to flow in.� With the investments in these two sectors, Asia Capital will truly become a diversified conglomerate and move away from its financial services centric businesses.� As some of you may be aware, we have produced a radical film on the social impact of militarization of the border villages, which has been commercially and critically acclaimed in Europe.� This is a personal initiative of mine and I am very proud of this success.�

The overall goal of Asia Digital Entertainment is to develop the entertainment industry through the introduction of new technology and the establishment of a production processing and distribution system of digital entertainment using a common platform.� As a method of entering the industry and having an impact, Asia Digital financed and produced the independent art house movie titled “Flying Fish” mentioned above.�

This Techonology push has been widely accepted by the industry leaders including veterans.� For example the new film byouracclaimedMasterDirectorDr.LesterJamesPieris, Mrs.� Sumithra Pieris and Dr.� Dharmasena Pathiraja is being produced digitally.� We anticipate the full business to be rolled out and be functional during the financial year 2013.�

Asia Digital also financed the first Hollywood film made by SriLankans–titled“TheCommonMan”anddirectedbyMr.Chandran Rutnam with a cast of international actors including the acclaimed Sir Ben Kingsley in the title role.� The film is now completedandisbeingmarketedintheUSAbyaleadingmarketer of independent films viz: Myriad films and is expected to be released internationally during the first quarter of 2012.� This is a brand new arena of business for Asia Capital and we have developed extensive plans including along nine different business verticals.�

I am deeply grateful to Mr.� Paul Mason a member of the Hollywood based film producers for playing a significant role in the development of the “Common Man” project, and Mr.� Sid Sheinberg the man who is credited with discovering Mr.� Steven Spielberg and introducing him to the world and

guiding us in our first international production .� We have surrounded ourselves with competent partners to help us in this brand new adventure .�

Further, in September 2011 Asia Capital sold its 40% holding of Asia Siyaka back to the management of that company for Rs.�175 million in yet another significant post balance sheet event.� This resulted in a net gain of Rs.�163 million as the investment was carried in the books at Rs.�12 million.�

As mentioned before, Stockbroking and Investments accounted for over half of the group PBIT for 2011.� Deposit mobilization and credit accounted for 10%.� Insurance accounted for 24%.� Thereturnonnetassets(RONA)ofAsiaCapitalGroupat100%is very high.�

Despite the strong performance of Asia Securities, the prognosis for the future is not as bright.� The economic difficultiesfacedbycapitalmarketsintheUSandEurope,alongwith the changes in the commission structures mandated by the governing bodies will no doubt contribute towards an adverse impact in the coming year.� Between these twin changes the industry has lost much of its allure.� It is sad to see that several of the new entrants are struggling to exist and some of our colleagues who bid adieu to join these companies are now merely treading water to survive in these extremely harsh conditions in the industry.� In anticipation of the changes, Asia Securities commenced expanding into the retail brokerage marketasfarbackasJune2009.Wearelookingforwaysandmeans of consolidating the industry and may consider stepping in, to resolve some of the troubled companies.�

The principal laggard in terms of relative sectors performance is Asia Leisure.� However that company is still small and is being developed to have the scope and economies of scale to create surpluses.� This sector represents under 5% of the group assets currently.� However this sector’s performance has now improved and we expect to make more investments in this sector in the near future and we have several projects in the pipeline which I will announce in due course as we have found that sector to be attractive in terms of our current market position, industry potential and market opportunities.� We plan to add more properties to our portfolio while increasing our room numbers within the next financial year.�


Asia Capital Technologies is credited as the Group’s subsidiary responsible for the development of the strategic IT road map for the group and enhance the resources and infrastructure towards creating capabilities and competencies for the successful implementation of IT solutions within the group.� In addition, the company is responsible for the development and tradingtheCDAXapplication,BackofficeDACSandafewothersoftware solutions exclusively designed to enhance the capital market operations.�

The Software development team has set a target to commission the operations of cDax suite an advanced version of the well knowncDax system before the end of calendar year 2012.� A marketing campaign will be accelerated to enhance awareness among existing and potential new clients about the state of the art features of the system.�

The current product base is to be expanded beyond the existing cDax product family by the financial year 2013 and

more diversified set of software solutions will be launched under company umbrella.�

Asia Tea Packaging was pieced together by buying out the equipment of a Tea Exporter then under liquidation and a factory mortgaged to Asia Asset Finance our lending subsidiary.� Consequently the assets were purchased at below market value.� It is a company that engages in blending, packaging and tea

bagging.� Having commenced operations in August 2010, the Company currently operates a packaging facility with a capacity to bag 10 million tea bags a month.�

The Company established a tea tasting department during the year and procured Sri Lanka Tea Board registration, exporter registration and license, and is currently engaged in the conceptualization and development of their own brand and blends.�

The production capacity is expected to be doubled by the end of financial year 2012.�

With the intention of further enhancing the quality of packaging, the company is looking forward to invest in a state of the art labeling & packaging machine which uses advanced packaging material capable of preserving the freshness of the tea leaves, at a cost of LKR.�45mn and is scheduled to commence operations by financial year 2014.�

I now draw your attention to the segmental report on page 146.�

At the time of writing this review, the earnings per share for the group for the year is at approximately Rs.� 8.�98 and this more than justifies the current market value at Rs.� 87.�50 for ACAP which is a PE of only 9.�7.� Based on my elementary calculations, we could justify a price earning of 12, if, in the next three or four years we can provide a CAGR of 20%.� We believe that the


The Company established a tea tasting department during the year and procured Sri Lanka Tea Board registration, exporter registration and license, and is currently engaged in the conceptualization and development of their own brand and blends

“ “


prospects of Asia Asset Finance Limited, a company that is on the verge of being listed is very good with the continuity of the low interest policies of the current Government.� We also believe that the Leisure Division and Investment Division will continue to perform well.�

In my last annual report I identified the year 2010 as a shift from loss to profit, highlighting change.� A profit of over 200 million was recorded from a loss of 379 million.� This is aptly documented in that Annual Report.�

I had designated 2010 as the year of turnaround and at the end of 2010, despite the profit, the Group was operating at a weak level due to years of losses and we needed to strengthen our balance sheet, instead of going back to the shareholders to strengthen our balance sheet, we decided to prime the pump by pushing all of the subsidiary companies into greater activity and profit at a turnover of Rs.�2.�13billion which is up 60% over last year.�

We have internally generated wellover Rs.�1 billion in profits during 2011, which is a significant achievement, making ACAP one of the bigger groups in the country.� Despite being on the floor at the conclusion of the last financial year, the ACAP Group managed to wipe out all of the accumulated losses over several years, which is unusual in a turnaround situation.� I have designated the year 2012 as the year of growth.�

I wish to congratulate our management team on this significant achievement.� We have not requested for any new money from our shareholders to stabilize the company and we have not brought any stress on our shareholders but have successfully increased the share price and given shareholders very high returns.�

In addition, we have set up tight processes and management committees, strengthened the Boards to improve corporate governance, set up better planning processes and co-ordinated amongst the group to realize the synergistic potentials of the various sectors we operate in, despite the ferocious attacks on our human resources, in the securities industry and capital markets in the latter part of 2010 by emergent competition, consequent to the SEC’s decision to permit several new additional licenses to new comers to the industry.�

We are also in the process of implementing a state of the art accounting and information system within the entire group

and we hope to implement a business intelligence layer on top of that to improve management information systems and goal-oriented evidence based management.� We consider this a major thrust in consolidating our gains for the future.� I have increased delegation at all levels of operation to improve hands on management and develop our young talented teams.�

The ACAP Group managed to wipe out all of the accumulated losses over several years, which is unusual in a turnaround situation. I have designated the year 2012 as the year of growth

“ “


We are also focusing on the various link pins of the management structure.� I believe the marriage of skill sets and opportunities of Asia Wealth and Asia Securities together form the future of the Securities business of Sri Lanka.�

Over the last several months, we have also taken steps to list our Finance Company viz: Asia Asset Finance Limited to exploit the unusual buoyant conditions of the market so that we have a market benchmark to measure the true value of assets at Asia Capital.�

I have suggested that employees set aside their thinking in individual silos of the company’s they represent, and think in terms of the Group strength.� They need to sit back and visualize and capitalize the strengths of the group rather than their own individual company strength.�

My other major push during this period of consolidation for the next12monthsisourexpansionintotheNorthandEast.TheNorthandEastisablueoceanasfarasACAPisconcerned.IwishACAPtodominatethefinancialservicesintheNorthandEast.� This requires both bold and calculated risk taking and thinking beyond the usual boxes and decision rules that the employees were comfortable with.�

Justasmuchas2010wastheyearofturnaroundand2011wasthe year of consolidation, the year 2012 is going to be the year of growth.� It is not going to happen automatically.� It is only goingtocomethroughnewinnovationsandinitiatives.Newinitiatives can come from organic growth from each individual company or from joint ventures.� We already have a partnership with Mubasher Financial Services in the Middle East.� It is my view that markets are likely to be rocky over the coming two years and we may probably have our set backs.� Growth is going to come from new ideas and our ability to absorb such risk taking.�

I have encouraged every employee to take calculated risk and manage the innovation process by hiring youngsters who dare

to dream and take on the world.� To quote George Bernard Shaw, “ A reasonable man wants to fit to the world and an unreasonable man the world to fit him.�” Therefore all progress in this world is made by unreasonable men” I have also encouraged the management to move away from traditional hierarchical structures and to be supportive of their younger staff in their unreasonable quest.� There is anecdotal evidence that the cultures of Sri Lankan companies are risk averse.� Asia Capital Companies will promote entrepreneurship and risk taking among their employees.� This can be successful only once you can convince staff that it is okay now and then to fall flat on your face.� While we shall not penalize our employees for taking calculated risk, we have made sure that there are very senior people with wise heads in every division to restrain staff from taking foolhardy risks.�

Additionally we are working with several new projects for Securities , Deposits and Loan Products for our retail clientele.� Also we have started on a geographical and new product development in the expansion at Asia Asset Finance.�

During the year 2009, one of our analysts Mr.� Tharindu Amunugama who is a photography enthusiast commenced takingphotographsofJaffnaduringhisfrequentvisitsthereon official business.� We encouraged him to spend time on that project to capture that community during a period of major transition and finance the production of a Coffee Table BookonJaffnaunderthetitle“Glorious Jaffna” That book written by another analyst Ms.� Sunela Samaranayake became the foundation of our Corporate Social Responsibility effort which is focused on providing financial assistance for 10,000 children affected by the war in many a terrible way ie: loss of parents, undergone severe trauma etc.�, Asia Capital funds “Glorious Jaffna” which is the entity that carries out this noble cause .� We have successfully established the mechanics of the operation during the year with some positive early results being documented.� I strongly believe that this effort is a means of overcoming the grief caused by violence and the war and breaking the cycle of violence through the expression of love.� I


“Justasmuchas2010wastheyearofturnaroundand2011wastheyear of consolidation, the year 2012 is going to be the year of growth”


wish to thank Mr.� Tharindu Amunugama for ably managing this effort along with the Project Officers Mr.� Lawrence Dushan and Ms.GeetaMahalingambasedinJaffnaandMr.TrehanPeirisandMr.NuwanKumarabasedinColombo.IfwearetodominatetheNorthandEast’sfinancialservices,weneedtobecomeone with that community.� The purpose of our CSR projects is to totally engage the community so that we are going to be a Colombo based company not merely trying to make some extraprofitinJaffna,butsupportingthatcommunityintheirhour of need.�

Sri Lanka is poised for transformation of economic growth.� I wish to transform this company from a well-managed enterprise into a great one.� We cannot achieve greatness without passion and daring and risk taking cannot be put down into equations and taught in text books.� All of our employees have been encouraged to look into their hearts and question themselves whether they are going to lose this wonderful opportunity.�

The last financial year was particularly difficult for me due to ill health when I seriously fell ill in October 2010 and was battling the impact of some physical disabilities caused by a stroke.� I stayed away from the country for medical treatment for several months.� However I have been ably supported by my team who have filled up the vacuum with great competence.�

I wish to thank all of them for their commitment and to the Board for their support.� I wish to particularly thank Mr.� Stefan Abeyesinhe who plays the crucial role of Acting Chief Executive Officer during my absence from the country.� I also wish to thank Mr.� Rajiv Gunawardena the C.�E.�O.� of Asia Asset Finance and Mr.� Daya Muthukumarana the Chairman of that Company for guiding the young team.� I also wish to thank the C.�E.�O.� of Asia Securities Mr.� Sabri Marikkar, Mr.� Mahinda Galagedera theC.E.O.ofAsiaLeisureandMr.RamalJasinghetheC.E.O.ofAsian Alliance Insurance.� I also wish to thank the Board for their support and co-operation.� I wish to particularly place on record my appreciation of Mrs.� Priyanthi Pieris who was always available to advise and guide me in matters of governance.�

Manohan NanayakkaraChairman/Managing Director

Board of DirectorsA Quantum Leap


Manohan NanayakkaraChairman/Managing Director

Paul RatnayekeDeputy Chairman

Daya Muthukumarana


Ranjith Pereira Andrew RossRanjith Wickramasinghe Valentine Siva


Manohan Nanayakkara Chairman/Managing DirectorMr.ManohanNanayakkaraistheChairman/ManagingDirectorof Asia Capital PLC and the Managing Director of Asia Securities (Pvt) Ltd.� He sits on the boards of all associate and subsidiary companies of Asia Capital PLC.�

He was the former Chief Operating Officer/Director of Asian Hotels and Properties Limited, previously known as Crescat, and the former General Manager of the Bureau for Infrastructure Investment (BII).� He also acted as the Chief Executive Officer/Managing Director of CF Venture Fund.� He is a Director of Pradana Limited, an Investment Management Company.�

He holds the following academic qualifications and experience: Fellow Member of the Institute of Chartered Management Accountants (FCMA); Master of Science in Accounting (MSA) fromJamesMaddisonUniversityofVirginia,USA;MastersinApplied Finance (MAF) and Masters in Business Administration (MBA)fromQueenslandUniversityofTechnology,Queensland,Australia.�

He was the Project Specialist who designed and managed theCapitalMarketProjectofUSAIDwhichprovidesassistancefor the privatisation and establishment of the Securities and Exchange Commission of Sri Lanka (SEC), and the development of the Colombo Stock Exchange (CSE).�

Paul RatnayekeDeputy ChairmanMr.� Paul Ratnayeke is a senior corporate lawyer who is also the precedent partner of Paul Ratnayeke Associates a leading law firm in Sri Lanka which he founded in 1987 handling all areas of law and international legal consultancy work.� Mr.� Ratnayeke is a Solicitor of England and Wales and an Attorney at Law of the Supreme Court of Sri Lanka.� He holds a Bachelor of Laws degree with honors and has been awarded a Masters Degree in LawbytheUniversityofLondon.CurrentlyMr.Ratnayekeholdsdirectorships in several companies including public quoted companies in some of which he has been appointed Chairman/Deputy Chairman.� At Paul Ratnayeke Associates, he specializes in corporate and commercial areas of law including mergers and acquisitions, aviation, insurance and maritime law.�

Daya Muthukumarana

Mr.� Daya Muthukumarana Is a professional banker holding a Fellowship from the Institute of Bankers Sri Lanka, an MBA from the Post Graduate Institute of Management , Certificates in Project ManagementfromArthurD’LittleBostonUSAandaManagementDevelopmentProgramfromCranfieldUniversityUK.

He held senior top management positions in reputed commercial banks in the country as the Senior Most Deputy GeneralManageratHattonNationalBankPlcandastheManaging Director of Pan Asia Bank PLC.� He was also the Chairman of the Ceylon Fisheries Corporation and served as a consultant to the government of Bangladesh in the Skills Development of the Bankers in that country, on a project managed by the Asian Development Bank in Dhaka.�

To Mr.� Muthukumarana’s credit as a very senior banking professional he possesses extensive experience in Corporate Finance, Corporate Banking, Micro Finance, Rural Finance, Commercial and Development Banking, Leasing and all other areas of Whole Sale and Retail Banking.� Mr.� Muthukumarana was a founder member of the Banking With the Poor project organized by the Foundation for Development Corporation Australia and was also an active member of the Asia Pacific Region’s Credit Association Bangkok.� He was trained in Advanced Credit Management and International Banking at the Vereins Bank AG Hamburg Germany and The Midland Bank PLC inLondon,UK.

During his tenure of office he has been instrumental in introducing many long lasting Banking and Micro Finance products and services in Sri Lanka.� Mr.� Daya Muthukumarana is also the Chairman of SEEDS (Guarantee) Ltd and the Chairman of Asia Asset Finance Limited; he is also a Director of Asia Capital PLC and Asia Leisure Limited.�

Ranjith Pereira

Mr.FXRanjitPereirawasappointedtotheboardofAsiaCapitalPLCasaNon-ExecutiveIndependentDirector.Heisapost-graduate Diploma holder in ‘International Trade Law & Practice’ fromtheUniversityofColomboandisafellowoftheCharteredInstituteofManagementAccountants-UK(F.C.M.A)andtheInstitute of Chartered Management Accountants - Sri Lanka.� He served continuously on the Divisional Committee of CIMA (Sri Lanka Division) from 1973 to 1993 and again from 2002 to 2004.� Mr.� Pereira served as President of the CIMA branch 1982-

Board of DirectorsA Quantum Leap


83.� He was Regional Representative for the South Asia region in 1989 -1992 and 2002-2004 on the Council of Chartered Institute of Management Accountants, London; where he also served on the Executive Committee of CIMA - London 2003-2004.�

Mr.� Pereira has held directorates in several high ranking Sri Lankan organisations throughout his career, among them being Lankem Ceylon Ltd.� where he served as Director Finance & Company Secretary from 1977 to December 1989, Finance Manager & Company Secretary of Lankem Developments Ltd.� from 1981 to December 1989, Director Finance & Company Secretary of Sigiriya Village Ltd.� Multistrech Ltd and Lankem Exports Ltd up to 1989, Finance Director of Richard Pieris & Co.LtdfromJanuary–August1990andDirectorFinance&AdministrationoftheJanasaviyaTrustFundfromDecember1990toJuly1995.

He practices as an independent Consultant to private sector organizationsandfortheIDA–WorldBank;ADBandnumerousother multilateral institutions.� He has been appointed as Chairman of the Audit Committee for Asia Capital.�

Ranjith Wickramasinghe

He is a fellow of the Chartered Institute of Management Accountants, Chartered Association of Certified Accountants.� Mr.� Wickramasinghe was former Chairman of Sri Lanka Ports Authority between 1996 and 1998 and Chairman of Ceylon Shipping Corporation from 1994 to 1996.� He worked in the national shipping line between 1970 and 1977 as deputy Finance Manager.�

Among his private sector stints were as Finance Director of George Steuart and Company from 2000 to 2002.� Currently Mr.� Wickramasinghe functions as a consultant.�

Valentine Siva

Mr.� Valentine is the Managing Partner of a boutique corporate finance firm based out of Kuala Lumpur which he founded in 2005.� The firm specializes in structuring large project financing deals and cross border financing.� The firm also collaborates closely with regional private equity firms in securing bridge financing.� He also has vast experience in Strategic Consulting with past engagements with many large conglomerates in Kuala Lumpur and Indonesia.� He was also the former Group Corporate Planner of a public listed company on the Kuala Lumpur Stock Exchange.�

He also served as Group Finance Director of a large oil palm plantation group in Malaysia.�

Mr.� Valentine, formerly from Arthur Andersen & Co.�, Malaysia, has vast experience in corporate finance, strategy and performance management (balance scorecards) and capital markets.� He holds a Bachelor of Accounting (Hons) degree from UniversityUtaraMalaysiaandTheCertifiedPublicAccountant(CPA) qualification from the Malaysian Institute of Certified Public Accountants (MICPA).�

Andrew Ross

Mr.� Ross holds a Bachelor of Arts in Accountancy and Law from StrathclydeUniversityinScotland,andisamemberoftheInstitute of Chartered Accountants of Scotland and a member of the Hong Kong Institute of Certified Public Accountants.�

Mr.� Ross has over 30 years of experience in Accountancy and Finance.� He is the Managing Director of Baker Tilly Hong Kong Limited (Certified Public Accountants), a member of the Asia Pacific Regional Board of Baker Tilly International, the Finance Director of Windy City International Limited (the operator of the Dan Ryan’s Restaurant Group) and an Independent Executive Director on the board of Global Tech (Holdings) Limited, which is listed on the Hong Kong Stock Exchange.�

Stefan Abeyesinhe

Mr.� D A S Abeyesinhe is the Acting Group Chief Executive Officer for Asia Capital PLC and also serves on the boards of Asia Securities (Pvt) Ltd.�, Asia Asset Finance Ltd.�, Asia Capital Technologies(Pvt) Ltd.�, Asia Leisure Holdings (Pvt) Ltd.�, Asia Leisure (Pvt) Ltd.�, Asia Tea Packaging (Pvt) Ltd.� and Asia Wealth Management Company (Pvt) Ltd.�

HepursuedhishigherstudiesinboththeUnitedStatesandtheUnitedKingdomafterwhichheworkedinfinancialmarkets in London.� On his return to Sri Lanka he joined PriceWaterhouseCoopers and Pradana Ltd, a boutique investmentfirmpriortojoiningAsiaCapitalPLCinJune2009.


Chief Executive Officers A Quantum Leap

Seated left to right

Ramal Jasinghe(Director/CEO - Asian Alliance Insurance)

Rajiv Gunawardena(Director/CEO - Asia Asset Finance Limited)

Manhida Galagedara(Director/CEO - Asia Leisure)

Standing left to right

Sabri Marikkar(Director/CEO - Asia Securities)

Stefan Abeyesinhe(Director/Acting Group CEO - Asia Capital PLC)


Asia Capital

Senior Management

Rajitha Basnayake Group Chief Information Officer

Thusitha PereraGroup Chief Financial Officer

Peter Jansen Group Head of HR & Administration


A Quantum Leap

Kalana Senaratne Manager HR & Administration Asia Securities (Private) Limited

Niroshan WijekoonDirector Asia Securities (Private) Limited

Niyaz AbubakkerDirector Asia Securities (Private) Limited

Shiyam SubaullaDirector Asia Securities (Private) Limited

Group Management


Kapila NawagamuwageFactory & Production Manager Asia Tea Packaging (Private) Limited

Dhanuka MudaligeGroup Management Accountant Asia Capital PLC

Assistant General Manager Finance Asia Asset Finance Limited

Saminda Weerasinghe Head of Research & Corporate Finance Asia Wealth Management Co. (Private) Limited

Sandun Thushara Group Management Accountant Asia Capital PLC


Roshan De GunasekaraGeneral Manager Asia Asset Finance Limited

Tharindu AmunugamaSenior Investment Analyst Asia Capital PLC

Group ManagementA Quantum Leap

Dishan Fernando Consultant - CEOAsia Capital Technologies (Private) Limited

Romesh Gomez Head of Treasury Asia Capital PLC


Saliya Wickramasinghe General Manager FinanceAsian Alliance Insurance PLC

Chula Hettiarachchi General Manager Sales & MarketingAsian Alliance Insurance PLC

B S Radha KrishnanConsultant - CEOAsia Digital Entertainment (Private) Limited(not pictured)

Thiru Neelakandan Deputy General ManagerAsia Asset Finance Limited


A Quantum Leap

Corporate StructureThe premium placed on high quality, professional standards, market knowledge and experience, strategic thinking and diversification have led to stable growth and strong disciplines within the Group, bringing significant expansion and returns across all our sectors.�

SECURITIES TRADINGAsia Securities (Pvt) Ltd

VENTURE CAPITALAsia Fort Sri Lanka Direct Investment Fund (Pvt) Ltd, Asia Growth Fund 1 (Pvt) Ltd

FINANCIAL SERVICESAsia Wealth Management Company (Pvt) Ltd, Asia Asset Finance Ltd

MANUFACTURINGAsia Tea Packaging (Pvt) Ltd(Affiliate Company of Asia Capital PLC)


“The distinct quality and eminence of Group’s business operations rendered it an inspiration to conglomorates in country’s financial sphere”

INSURANCEAsian Alliance Insurance PLC (Asia Capital stake in Asian Alliance Insurance PLC was disposed on 12th August 2011)

ENTERTAINMENTAsia Digital Entertainment (Pvt) Ltd(Affiliate Company of Asia Capital PLC)

INFORMATION TECHNOLOGYAsia Capital Technologies (Pvt) Ltd

LEISUREAsia Leisure Holdings (Pvt) LtdAsia Leisure (Pvt) Ltd


A Quantum LeapCorporate Structure

Asia Securities (Pvt) LtdDirectorsJHPRatnayeke(Chairman)HLLMNanayakkara(MD) PNBWijekoonS A AbeyesinheM S I MarikkarAnura HedigallageShiyam SubaullaMohamedAbubakkerMohamedNiyaz

Alternate DirectorsS A Abeyesinhe(Alternate Director to H.L.L.M Nanayakkara)

S A Abeyesinhe(Alternate Director to J H P Ratnayeke )

Shareholding of Asia Capital PLC99.�99%

AuditorsKPMG Ford Rhodes Thornton & Co.�

Asia Capital Technologies (Pvt) Ltd (Formerly known as Investor Access Asia (Private) Limited)

Name of the Directors HLLMNanayakkara(Chairman) S A AbeyesinheR A B Basnayake

Shareholding of Asia Capital PLC100%

AuditorsAmarasekara & Co

Asia Wealth Management Company (Pvt) LtdDirectors HLLMNanayakkara(Chairman) S A AbeyesinhePNJansenW A S Weerasinghe


AuditorsAmarasekara & Co

Asia Asset Finance LtdNames of the DirectorsD Muthukumarana (Chairman) HLLMNanayakkaraRJAGunawardenaS A AbeyesinheWJAFernandoC Ramachandra

Alternate DirectorDayangani Priyanthi Pieris(Alternate Director to H. L. L. M. Nanayakkara)

Shareholding of Asia Capital PLC99.�87%

AuditorsErnst & Young

SECURITIES TRADINGAsia Securities (Pvt) Ltd

FINANCIAL SERVICESAsia Wealth Management Company (Pvt) Ltd Asia Asset Finance Ltd

INFORMATION TECHNOLOGYAsia Capital Technologies (Pvt) Ltd


Asian Alliance Insurance PLCDirectorsA K Pathirage (Chairman) JHPRatnayeke(Deputy Chairman)Prof.� Laxman R.� WatawalaRGJasingheS RajapakseT M I AhamedR P PathiranaSNFernandoM R Abeywardena

Alternate DirectorS A Abeyesinhe(Alternate Director to J H P Ratnayeke)

Shareholding of Asia Capital PLC & its subsidiaries51.�03%

AuditorsKPMG Ford Rhodes Thornton & Co

Asia Fort Sri Lanka Direct Investment Fund (Pvt) LtdDirectors JHPRatnayeke(Chairman)HLLMNanayakkara(MD)



Asia Growth Fund 1 (Pvt) LtdDirectorsJHPRatnayeke(Chairman) HLLMNanayakkara(MD)S A Abeyesinhe



Asia Tea Packaging (Pvt) LtdDirectors HLLMNanayakkara(Chairman)S A AbeyesinhePNJansen


Asia Digital Entertainment (Pvt) LtdDirectors HLLMNanayakkara(Chairman)S A AbeyesinhePNJansen

Alternate DirectorRJAGunawardena (Alternate Director to Mr. H L L M Nanayakkara)


Asia Leisure Holdings (Pvt) LtdDirectors HLLMNanayakkara(Chairman)S A Abeyesinhe M S D GalagedaraD Muthukumarana


AuditorsA C M Ifhaam & Company

Asia Leisure (Pvt) LtdDirectorsHLLMNanayakkara(Chairman)S A Abeyesinhe M S D GalagedaraD Muthukumarana


AuditorsA C M Ifhaam & Company

INSURANCEAsian Alliance Insurance PLC(Asia Capital stake in Asian Alliance Insurance PLC was disposed on 12th August 2011)

VENTURE CAPITALAsia Fort Sri Lanka Direct Investment Fund (Pvt) LtdAsia Growth Fund 1 (Pvt) Ltd

MANUFACTURINGAsia Tea Packaging (Pvt) Ltd(Affiliate Company of Asia Capital PLC)

ENTERTAINMENTAsia Digital Entertainment (Pvt) Ltd(Affiliate Company of Asia Capital PLC)

LEISUREAsia Leisure Holdings (Pvt) Ltd Asia Leisure (Pvt) Ltd




Management Discussion & Analysis

GROUP OPERATIONS

Operational Focus for the year 2010/2011

Asia Capital PLC in 2010/2011 continued to pursue a strategy

of diversification although the overall focus during the financial

year lay in the consolidation of the Group’s business.� The year

served as a turnaround one with each of the core business

concerns recording a commendable growth momentum.�

Whilst 2009/2010 was predominantly a year of recovery, in the

financial year under review, Asia Capital PLC persisted towards

a strategy of restructuring, moving ably towards repositioning

itself as an investment company with core holdings in Credit,

Equity, Financial Services and Insurance as well as a corporate

venturing arm to manage the leisure and tea brokering

operations.� It also has holdings in Digital Entertainment.�

The crux of the Group’s operations encapsulates Investment

Banking services, Stock Brokering, Treasury Functionalities,

InsuranceUnderwriting,Fundmobilizinganddeposittaking,

Information Technology and Commodities trading.� Hence it is

regarded as a diversified financial services group.�

During the year, the Group consolidated its ownership control

over core holdings, whilst simultaneously strengthening the

“Asia” brand in an attempt to strategically leverage on the

synergistic opportunities arising within the periphery of the

holding company.� Similarly, the Group effectively exploited its

A Quantum Leap

During the year, the Group consolidated its ownership control over core holdings, whilst simultaneously strengthening the “Asia” brand in an attempt to strategically leverage on the synergistic opportunities arising within the periphery of the holding company.�


position of strength within the financial services industry to

cascade an ethos of performance excellence across non-core

holdings.� Strategies were also deployed towards establishing

the Group’s Credit and Equity holdings as a “one stop

financial services hub”.� The concept has served towards firmly

establishing the Group’s product and service offer to a more

diverse target, whilst also bringing to reality a service concept of

“one location, many services”.� In the medium term, the intention

of the Group will be to establish the said one stop financial

serviceshubineverymajorcityincludingJaffna,Kandy,Galle

and Kurunegala.�

Group Financial Performance

2010/2011 was a year wherein Asia Capital PLC posted

exceptional financial performance.� Group revenue grew by

credible 60 percent to Rs.� 2.�12 billion, up from Rs.� 1.�33 billion in

2009/2010 financial year.� This was all the more significant in that

Asia Capital had posted losses repetitively in the previous three

years.� The turnaround was precipitated with Group deriving net

earnings of Rs.� 232.�56 million in 2009/2010 and commendable

Rs.� 1,151 million for the financial year under review.� The Group

“The Group earnings in 2010/2011 witnessed impressive 395 percent growth and surpassed Rs.� 1 billion mark for the first time in its inception”

RevenueGrowth

0.96

Rs. B

n.

1.80

1.33

2.12

10/1109/1008/0907/08

Pro�t After Tax Growth

(0.3

7)

Rs. B

n.

(0.3

8)

0.23

1.15

10/1109/1008/0907/08

Revenue Segment Composition

13%

26%

28%41%

3%2%

39%23%

22%

3%Investments

Stock Broking &Investment Banking

Deposit Mobilisation &Credit

Insurance

Leisure

2011

2010

RONA

(60)

%

(88)

61

100

10/1109/1008/0907/08

Asia Capital PLC persisted towards a strategy of restructuring, moving ably towards repositioning itself as an investment company


earnings in 2010/2011 witnessed impressive 395 percent

growth and surpassed Rs.� 1 billion mark for the first time in its

inception.�

Consolidation of revenue from Asian Alliance Insurance

(AAI)–theGroup’sInsuranceholding–iscreditedasthe

primary cause for the growth in Group revenue for the year,

with AAI contributing a full year of revenue as opposed to

only an associate share of revenue as in the year 2009/2010.�

The contribution from Insurance stood at 22 percent whilst

contribution from stock brokering operations stood at

commendable 39 percent.� Stock brokering, Insurance and

deposit mobilization acted as primary contributors to Group

profitability.� However, all core and non-core holdings posted

positive contributions during the year.� The revenue growth was

also precipitated by commendable revenue generation of the

leisure segment.�

Gross profit margin recorded a healthy increase driven

by stringent cost management with focus on reducing

discretionary costs.� Thus, the Group demonstrated a healthy

gross profit margin of 67 percent for the financial year and a

gross profit of Rs.� 1,419.�1 million, as against Rs.� 650.�7 million in

the year 2009/2010.�

The stock market reacted positively to the fundamental

recovery of the Group with the ACAP Index outperforming

both the ASI and the Banking, Finance and Insurance sector

Index during the year under review.� This was also made evident

through share price movement of Asia Capital which rose from

a low of Rs5.�5 in April 2009 to Rs.�90 as at end May 2011.� In

January2011,theACAPpricemovedupsharplyinresponseto

the release of the Group’s third quarter financial results.�

2010/2011 therefore was primarily a year of consolidation of

the Group’s recovery.� Significant stabilization was achieved

and re-engineering strategies put in motion by the new

leadership and management whilst reaping benefits from the

post war economic recovery.� Going forward, the financial and

operational success of the Group will continue to depend on a

judicious and strategic approach to consolidation and growth.�

Management Discussion & AnalysisA Quantum Leap


Treasury Operations optimizes profitability

The Group’s treasury operations act as a support mechanism

to value generation.� As an active participant in the secondary

market, the division offers its services to all subsidiaries by

harnessing the Group’s synergies in effectively managing the

Group’s fixed income investments.� In addition, through prudent

treasury operations, the Group benefits from the structure and

placement of debt for working capital purposes.�

In 2010/2011, the division also assisted the Group towards the

achievement of its strategic vision to be positioned as a “one

stop financial services hub”, by effectively developing services

to enhance the wealth generation of the Asia Securities client

base.� Through judicious secondary market activity the division

also assisted associate companies towards enhancing the

value of their investments whilst pursuing a strategy of risk

minimization.� The division also successfully structured and

placed private debt through placements during the year.�

The division will look to expand its line of business in the

forthcoming financial year to assist towards greater vale

addition to Group revenue.� In this respect the division will seek

to broad base the client portfolio in tandem with effective

treasury operations that will be geared towards benefiting

from exploiting interest rate fluctuations.� Thus, the division will

objectively strive towards the achievement of a 20 percent

growth in the bottom line.�

SUBSIDIARY OPERATIONS Asia Securities

Asia Securities in 2010/2011 continued to be positioned as the

premier stockbroker in the industry despite intense competition

stemming from an exponential growth in trading activity.� Brisk

market activity was evident during the financial year under

review, largely as a result of the post conflict economic boom.�

SriLanka’sstockmarket–theColomboStockExchange-

posted a formidable year on year growth of 96 percent in 2010,

and was propelled to the top of the list of best performing

markets in the world.� The Colombo Stock Exchanges’ market

capitalization in 2010 reached the Rs.� 2 trillion mark for the

first time, the direct outcome of a 400 percent growth in

market turnover.� On the back of exceptional market activity,


the Securities Exchange Commission of Sri Lanka (SEC) issued

7 new broker licenses upping the total number of brokerages

to 27 companies in 2010/2011.� As a result during the year, the

volume of CDS (Central Depository System) accounts increased

by 25 percent.� It is expected that the growth in competition will

facilitate the growth of the market by a further 30 percent in the

medium term.�

However, despite the intensified competition and the more

potent challenges faced by the industry in terms of player

rivalry, Asia Securities continued to maintain a commendable

growth momentum during the year, thereby retaining a

position of market leadership.� During the year, in a bid to

garner greater returns and to sustain the pace of growth, Asia

Securities decided to expand the retail base.� Contribution

from the retail segment grew rapidly in 2010/2011, assisting

towardsperformanceenhancementsduringtheyear.Network

expansion–throughtheconceptofonestopfinancialservices

hub - to semi-urban areas outside of the perimeters of Greater

Colombo catalysed an expansion of the retail base, thus

providing the impetus for greater volume growth.� Greater

accessibility also precipitated a growth in the number of

accounts during the year, with Asia Securities recording a

125 percent growth in overall business.�

This burgeoning demand necessitated greater resources in

2010/2011, and as such, the Company expanded its broker

team by a further 15 professionally qualified and experienced

brokers who were deployed both across the branch network as

well as at the head office operations.� Investments into broker

training during the year have assisted towards the formation

of a team of specialists, who are looked upon as the market

and investment experts.� Broker expertise was also enriched

by Asia Securities’ collaborations with global research firms.�

These linkages have enabled Asia Securities to leverage its

access to global trends, best in class research information and

technical expertise to enhance the service offer to customers.�

The Company’s brokers act as advisors to customers, managing

their portfolios through expert market know-how and wealth

management techniques.� As at the end of the financial year,

the broker team stood at 64 advisors and comprised of a

predominantly young yet passionate and professional team

who have consistently worked towards enhancing the

future growth opportunities of Asia Securities and Asia Capital

as a Group.�

Trading links with key international banks coupled with

strategic links to premier international research houses enabled

Asia Securities to be ahead of the domestic competition.�

Accessibility to the most up to date global information, trend

analysis and market projections enabled Asia Securities to

remain in the top league in the financial year 2010/2011.� During

the year, the Company strategically collaborated with Mubasher

–DirectFN,anonlinetradingplatformprovider,toprovideits

customer base with more precise, faster and efficient links to

the CSE.� Mubasher is a key player in providing ICT solutions to

the Financial Services industry in the Middle Eastern Region.�

Financial Review

From a financial performance perspective, Asia Securities

posted exceptional returns in 2010/2011 and remained one of

the most dominant revenue contributors of the Asia Capital

Group.� Recording an impressive 125 percent top line growth,

the Company posted revenue of Rs.� 822 million in 2010/2011.�

Company witnessed a staggering bottom line growth of 259

percent to record Rs.� 273.�4 million during the year under

review.� The growth in revenue was precipitated largely by the

unprecedented bull run at the Colombo Stock Exchange (CSE)

spearheaded by resurgence of the national economy.�

As a result during the year, the volume of CDS (Central Depository System) accounts increased by 25 percent.�



Gross profit margins of Asia Securities edged down in

2010/2011 to 86 percent in contrast with 87 percent

in 2009/2010.� The administrative expenses, however,

demonstrated an upward movement as an outcome of the

need to facilitate greater growth and for the year under review

recorded an acceleration of circa 92 percent to reach Rs.� 225

million.� This increase is in line with the revenue growth for the

year.� EBIT margins expanded to 60 percent in 2010/2011 up

from 37 percent in 2009/2010.�

Return on equity of Asia Securities stands at a commendable 97

percent for the financial year under review in comparison to 52

percent in 2009/2010.� The robust ROE is a further signal of the

Company’s current and potential strength.�

Looking to the future, Asia Securities will continue to follow

a strategy of expansion.� As a growth strategy, the Company

will pursue and collaborate with international funds to garner

greater growth through an institutional base.� However, the

focus on enlarging the retail base will continue to be a core

strategy going forward, especially in view of the fact that the

capacity for retail expansion remains high.� In the forthcoming

financial year, Asia Securities looks to establish specialist teams

comprising of investment advisors who will focus on the

development of high net worth and institutional customers.�

The development of IT systems and support mechanisms will

aid further leveraging of the Asia Securities position in the

market place towards future growth.�

Asia Wealth Management

Asia Wealth Management is one of Sri Lanka’s emerging

investment banking/wealth management companies

specializing in the areas of corporate finance and equity

research.� Providing integrated capital markets and advisory

services, Asia Wealth offers innovative solutions, across a wide

range of products including both buyside and sellside mergers

and acquisitions (M&A), capital raisings, restructurings, project

finance, structured finance, and tailored strategic and financial

advice.�

The Company continued to conduct intensive research on

equities during the year and was one of the primary sources of

Asia SecuritiesThe focus on enlarging the retail base will continue to be a core strategy going forward, especially in view of the fact that the capacity for retail expansion remains high.

Asia Wealth ManagementCompany expanded the portfolio value to approximately USD 50 million

RevenueGrowth

170.

35

Rs. M

n.

103.

75

364.

85

822.

00

10/1109/1008/0907/08

Net Pro�tGrowth

2.95

(55.

21)

76.1

8

273.

42

Rs. M

n.

10/1109/1008/0907/08


independent research to much of corporate Sri Lanka, including

the Company’s associates.� The Company is considered one of

the leaders in equity based research and its reports are held in

high esteem amongst industry experts.�

In the arena of portfolio management, the Company persisted

towards excellence during the period under review.� Viewed as

the best in the industry by far in the year 2010, the Company

expandedtheportfoliovaluetoapproximatelyUSD50million

during the same period.� In the upcoming financial year, the

expectationistodoubleportfoliovaluetoUSD100millionand

tostrivetowardstheachievementofUSD150million.

Asia Asset Finance

Asia Asset Finance, a fully owned subsidiary of Asia Capital

PLC is a company licensed for deposit mobilization and the

provision of a range of financial services including leasing,

hire purchase and asset backed financing to both individuals

and corporations.� As a business entity, the Company has been

operational for over 41 years under the brand of Finance and

Land Sales.� In 2004, Asia Capital PLC acquired the Company.� In

2009/2010, the Company underwent expansive restructuring

and as a result witnessed a turnaround in financial viability with

net losses declining from Rs.� 175.�6 million to Rs.� 84 million for

the year ended 2009/2010.�

During the year under review, Asia Asset further consolidated its

position of recovery to record profitability of Rs.� 79.�7 million.� A

195 percent increase in profit after tax at the end of the financial

year 2010/2011 heralds a beginning of wealth creation for the

Company.� The future growth potential for Asia Asset is signaled

by the fact that the Company presently enjoys a healthy

NonPerformingLoan(NPL)portfolio,strengtheneddeposit

mobilization and a robust credit portfolio.�

In 2010/2011, growth was accelerated by a strategy of

expansion under the Group’s strategy to enhance accessibility

through the “One stop financial services hub” concept.� Asia

Asset played a key role in this by acting as the credit facilitator

in the financial services product portfolio.� A key success factor

for the Company during the year, therefore, was enhanced

accessibility with network expansion standing at 9 branches.�

A further 4 additions to the branch network is in the pipeline

for the forthcoming financial year.� The Company considers

a strategy of market penetration as the key to financial

viability in the long term and is therefore conceptualizing and


Growth was accelerated by a strategy of expansion under the Group’s strategy to enhance accessibility through the “One stop financial services hub” concept.�

Composition of assetspertaning to interest income

276.4

1

224.1

8

157.3

0

329.6

1

233.6

224

9.33 10

6.47136.28

190.84

131.52

196.37

78.04

139.3

0

144.5

9

217.2

144

1.90

154.6

745

0.07

597.5

532

6.46

Lease

Hire Purchase

Loans and Advances

Rs.M

n.

Short Term Investments

Interest income10/1109/1008/0907/08

Customer Deposits

786.

90

999.

86

1,03

2.29

1,30

9.54

120.56

203.91

147.37

186.25

Deposits

Interest expense

Rs.M

n.

10/1109/1008/0907/08

InterestSpread

1.1

0.9

(1.5

)

6.5

13

1822

1820

23

17

19

Interest Yield

Expense Yield

Spread

%

10/1109/1008/0907/08


implementing a range of innovative product strategies to

garner greater returns through an expanded target base.�

During the year, Asset Asia Finance supported the operations

of associate companies of the Group Company through the

provision of financial services.� The Company followed a risk

minimisation strategy to ensure sustainability of the business

and looked to improve efficiencies through the optimization of

existing resources.�

Financial review

From a financial perspective Company performed well above

expectations during the year under review The bottom-line

for the year 2010/2011 witnessed an exceptional 195 percent

growth compared to that of 2009/2010.� Increase in interest

income and other income coupled with fall in interest and

other expenses contributed towards the Company posting a

healthy net profit of Rs.� 79.�7 million for the year 2010/2011.�

With interest income increasing by 49 percent to Rs.� 196.�4

million, the Company persisted against declining yields and

a challenging macroeconomic environment to achieve an

impressive 72 percent rise in interest earning asset portfolio.� Of

the total interest income, leasing and hire purchase contribute

a major portion of the earnings.� The Average Weighted Prime

Lending Rate (AWPLR) continued to decrease during the year

in response to the Government of Sri Lanka’s (GoSL) policy

to enhance credit mobilization as a means to revitalize the

national economy.�

Interest expenses declined 21 percent from that of 2009/2010

to Rs.�147.�4 million during the year.� This is largely attributable to

the decrease in costs pertaining to interest bearing liabilities.�

Despite a 27 percent expansion in the deposit base, declining

interest rates contracted the interest expenses enabling the

CompanytorecordaRs.49millionNetInterestIncomeforthe

period under review.�

Asia Asset FinanceThe bottom-line for the year 2010/2011 witnessed an exceptional 195 percent growth

Asian Alliance InsuranceCompany recorded a significant growth in Profit before Tax amounting to Rs. 370.5 million during the year 2010

Net Pro�ts Growth

(678%)

(252%)

195%

52%

%

10/1109/1008/0907/08


Interest spread increased in 2010/2011 to 6.�5 percent as a result

of declining deposit rates outpacing the decline in lending

rates.� This scenario gave rise to a healthy net interest income for

the year.� However, future spreads throughout the sector may

remain at low levels due to high penetration of loans on the

back of favourable economic conditions.�

Other income witnessed an exceptional growth of 131

percent in 2010/2011 posting Rs 131.�7 million gain.� A major

portion of other income comprised of returns realised from

investment portfolios.� The Company recorded encouraging

improvements to its deposit base with a compounded annual

growth rate of 22 percent for the past five years and year on

year growth of commendable 27 percent as an outcome of

intensified marketing and branch expansion.� Interest earning

assets growth for the year was significant with the Company’s

loan book surpassing Rs.�1 billion mark precipitated by growth

in the leasing and hire purchase business, and as a direct

consequence of the revision of import duties on vehicles

bytheGoSLinJune2010.TheCompanycapitalizedonthe

market opportunity to post a Rs.� 34 million revenue on leasing

activities.�

With the increase of interest income coupled with tight

management controls over administration expenses, the

cost to income ratio for the period under review contracted

to commendable 57 percent as opposed to high cost ratios

evidenced in preceding years.� The liquid asset ratio dropped

to 10 percent from previous level of 21 percent.� The gross non-

performing ratio decreased from 26.�4 percent in 2009/2010 to

10.�4 percent for the year 2010/2011 as an outcome of a more

judicious approach to credit evaluation and recoveries resulting

inadeclineby61percentinNon-PerformingLoans(NPL).

Future strategies for growth include the development of

a diversified product range as a tool for market expansion.�

Towards this end, Asia Asset Finance commenced negotiations

with a number of global banks to collaborate with on the

area of microfinance.� The objective will be to lend subsidized

valuestotheNorthernandEasternprovincesforinfrastructure

development of agriculture, fishing and farming sectors.� Whilst

the Company is currently benefiting from a scenario of zero

bank borrowing, in the forthcoming financial year the intention

will be to raise capital through an Initial Public Offer on the

Colombo Stock Exchange.� The capital raised through this effort

will facilitate the Company’s expansion programme.�

Asian Alliance Insurance

Asian Alliance Insurance (AAI) remained key to the exceptional

financial performance of the Group in 2010/2011.� The Company

continued to maintain its market position as the 6th largest

player–fromtheperspectiveofpremiumvaluation-inthe

industry during the year.�

Operational Overview

From an operational perspective AAI witnessed tremendous

growth in Life Insurance recording a 30 percent increase in

profit, the highest in the 10 year history of the Company whilst

the overall Life business enlarged by 23 percent from that of

the previous financial year.� As a result at the end of the financial

year 2010, AAI’s Life business evidenced Gross Written Premium

(GWP)valuedatRs.1,243million,andAnnualizedNewBusiness

Premiums(ANBP)valuedatRs.600million.Operationally

the Company’s Life Division excelled in the area of customer

retention–signalingcommendablecustomersatisfaction

levels–withretentionenhancedby9percentduringtheyear

to reach a creditable 74 percent, the highest retention rates

witnessed in the Insurance Industry.� Further the Company


Life Division excelled in the area of customer retention - signaling commendable customer satisfaction levels - with retention enhanced by 9 percent during the year to reach a creditable 74 percent, the highest retention rates witnessed in the Insurance Industry


increased its Average Policy Value to Rs 55,000 demonstrating

its dominance in the high income bracket niche market.�

TheNon-Lifebusinessfocusedprimarilyonrefiningthequality

of their portfolio, shifting from an emphasis on growth in GWP

to a consolidation of the portfolio in terms of profitability of

policies.� Accordingly GWP for the year contracted from

Rs 497 million in 2009 to Rs 431 million in 2010 as a

consequence due to the conscious shedding of non profitable

classes of insurance and loss of substantial volumes of public

sectorbusiness.However,despitethistheCompany’sNon-

Life business recorded a value growth of Rs 112 million in net

profit for the year ended 2010.� Profitability for the Division was

propelled primarily by prudent underwriting measures taken

along with the significant returns from the investment portfolio.�

As a part of the drive to reduce claims ratios, the profitability

of different accounts was studied, and painstaking steps taken

to shed loss-making accounts worth approximately 14 percent

of the previous year’s GWP.� For the selection of accounts going

forward, psychographic and demographic data was collected

and careful statistical analysis carried out to determine the most

profitable classes.�

As a result of these initiatives, the Company achieved a

significantincreaseinNetIncometoShareholdersinthe

financial year 2010.� Financial results confirm that performance

has improved in all lines of business.� The Life insurance

business grew in terms of both Gross Written Premiums and

UnderwritingProfits.TheNon-Lifesegmentcontinuedtobuild

momentum based on new strategies to make a very strong

contribution to overall performance.�

The Company also carried out statutory valuations and interim

audits of the Life Division during the year under review.� This

process enabled AAI to be the only insurance company to

declare interim bonuses to policy holders and transfer profits to

the shareholders during the financial year.�

Financial Review

AAI’s financial performance in 2010 was driven by reinforced

sales and distribution channels, training and knowledge

management coupled with refinements to its tailor-made,

specialistproductsinbothLifeandNonLifesegments.Asa

result, the Company witnessed an overall revenue growth of

28 percent during the year.� A stable low loss ratio was achieved

with the insurance portfolio witnessing further improvements

in terms of portfolio quality as a consistent outcome of

historical prudence in underwriting.� Investment income

fromInvestmentFunds(bothLifeandNonLife)contributed

substantially to profit growth, with the Company entrusting

the funds to professional wealth managers through the Group’s

associate Asia Wealth Management Co.� (Pvt) Ltd.�

The Company recorded a significant growth in Profit before

Tax amounting to Rs.� 370.�5 million during the year 2010.� The

Life division contributed Rs 253.�6 million, posting a 30 percent

YOY increase to post the highest profit in AAI’s history of Life

operations.TheNonLifedivisioncontributedRs116.9million

towards this exceptional performance, primarily due to the

prudent underwriting measures taken along with the significant

returns from the investment portfolio.�

Net Pro�tAfter Tax

113.

30

135.

40

144.

78

368.

01

Rs. M

n.

10090807

Earningsper Share

4.53 5.

42 5.73

13.7

3

Rs.

10090807

Returnon Equity

42

32 32

55

%

10090807


During the year the Company successfully completed a

Rights Issue of Rs 812.�5 million in December 2010 which has

strengthened the company’s Balance Sheet significantly.� As

such, the Investment Base increased from Rs 2,314 million to

Rs 3,751 million, a 62 percent increase y-o-y.�

As a result of the growth in Stated Capital and internally

generated funds, the Total Assets of the Company increased by

58 percent YOY from Rs 2,740 million to Rs 4,318 million.� Adding

to this, the Company’s operational results further strengthened

theNetAssetValueoftheCompanytoRs1,561million,a202

percent increase YOY.� This robust financial base continues to be

essential to support AAIs customers in their times of need.�

Based on the successful completion of the Company’s Rights

Issue, RAM Ratings Lanka upgraded the Company’s claims-

paying ability rating, from BB+ to BBB-; the rating outlook

remains stable.�

The Earnings per share of the company increased to Rs13.�73, a

140 percent growth over last year, which serves as one of the

key indicators of the company’s profitability.� Return on Equity of

the Company increased to 55 percent, an increase of 23 percent

over last year, which indicates the focus of the management to

maximize the shareholder return.� In calculating the Earnings Per

Share and Return on Equity consideration of the impact of the

Rights issue carried out in December 2010 has been made.�

Asia Leisure

With Sri Lanka’s tourism sector recording a phenomenal

growth of 47 percent in 2010 to record 654,476 tourist arrivals,

the sector has been reaping post war dividends.� In 2011, the

official “visit Sri Lanka” year, Sri Lanka Tourist Board estimates

arrivals to peak at 750,000.� Sustained stability and peace have

laid a foundation for firm growth of the destination and the

tourism sector is billed to demonstrate consistent growth in

the medium to long term.� Sri Lanka’s tourism authorities expect

visitor arrivals to increase to 2.�5 million visitors by the year 2025.�

However, the industry faces a severe capacity constriction with

a shortage of quality international standard rooms to meet the

strategic targets for 2025, and authorities have been actively

promoting tourism development across the nation to meet

the capacity requirements.� In the backdrop of this positive

industry outlook, Asia Leisure views its future growth potential

with optimism and has been gearing its resources to mirror the

growth momentum of the sector.�

Asia Leisure (Pvt) Ltd, as the leisure arm of Asia Capital PLC

owns and manages a portfolio of properties in Colombo,

BalapitiyaandGalle.Thethreeproperties–ParkStreetHotel,

The River House and The Tamarind Hill are globally acclaimed

boutique style properties.� The River House lays claim to being

the first property in Sri Lanka to be featured in the international

renownedCondeNastTraveller’sannualHotListin2005and

was listed as one of the “hottest” new hotels in the world.�


Park Street Hotel River House


Similarly,itearnedaplaceintheRobbReport100Ultimate

Luxury Escapes for two consecutive years.� The Tamarind Hill

Hotel, Galle is nominated to receive the International Quality

Summit Award from the Business Initiatives Directions (BID) in

the Gold category in 2011.�

Currently, Asia Leisure’s growth is limited by the lack of capacity

and therefore, strategic focus lies in capacity enhancement in

going forward.� With a current total capacity of 40 rooms, the

Company looks to enhance room strength to 70 by the end

of the forthcoming financial year and 150 rooms by the year

2013.� In the pipeline for construction is a 26 roomed beach

property in Balapitya in Southern Sri Lanka that is expected to

be ready for operation by end 2012.� This landmark resort will

embody an Asian design concept whilst balancing modernity

and contemporary design styles.� Of the 26 rooms, the resort will

also contain 2 Presidential Suites.� The inclusion of the property

in the Company’s portfolio will help us gain greater business

from international travel agents, who most often prefer the

availability of a beach property.�

The Company posted a commendable financial performance

during the year, and demonstrated financial and operational

recovery from years of below average performance in the past.�

The Company recorded a turnover of Rs.� 63.�6 million for the

period 2010/2011, an improvement of 32 percent from that of

Rs.� 48 million for financial year 2009/2010.� Revamping of the

operations and the delegation of financial responsibility to each

resort as a separate business unit paved the way for financial

recovery during the year.� In addition, the recovery of the

destination, intensive marketing efforts and enhanced relations

with the international travel agent communities assisted

towards the healthier state of financials in 2010/2011.�

In looking to the future, the Company will continue to source

and procure favourable land for future tourism development.�

Towards this end, Asia Leisure is assessing the feasibility of

procuringlandinJaffnaandTrincomaleefortheconstruction

of beach properties.� Work study is currently underway for the

outright purchase of a state of the art hotel in the scenic and

historic city of Dambulla.�

Asia Leisure is planned to be listed on the CSE under Diri Savi

Board in the future.�

Asia Tea Packaging

Asia Tea Packaging is the latest addition to the Asia Capital

Group and is the direct outcome of a strategy of back

integration from the long standing business of tea brokering.�

It is a company that engages in blending, packaging and tea

bagging.� Having commenced operations in August 2010, the

Company currently operates a packaging facility with a capacity

to bag 10 million tea bags a month.� Tea packing operations also

include bulk packing, packaged tea and catering bags as well

Asia LeisureCompany recorded a turnover of Rs. 63.6 million for the period 2010/2011, an improvement of 32 percent

Asia Tea PackagingCompany’s strategic vision is to build a brand for the international and domestic markets.

Tamarind Hill Tea Packaging


as pot bagging.� Contract packing for mainstay brands has been

the main area of focus in 2010/2011; however, the Company’s

strategic vision is to build a brand for the international and

domestic markets.�

Towards the realisation of this vision, the Company established

a tea tasting department during the year under review and

procured Sri Lanka Tea Board registration, exporter registration

and license, and is currently engaged in the conceptualization

and development of the brand and blends.�

Asia Digital Entertainment (Private) Limited

Asia Digital Entertainment is the entertainment initiative of

the Asia Capital Group fondly called AdepT.� Mr.� Manohan

NanayakkarathegroupChairmanalwaysfeltentertainment

was the fourth basic need of mankind.� The company was

established in September 2010 and operates in collaborative

partnership with Gemini Industries and Imaging Private Limited,

India’s leading entertainment conglomerate.�

ADEPT operates many business verticals; Motion Picture

Production, Television Content Production, Digital Cinema and

Content-to-Mobile.� It is the long felt dream of Mr.� Manohan

NanayakkaratobringinProfessionalsfromtheindustrytohone

the skills of the local talent and to create a bridge between

Sri Lanka to connect to Hollywood through Bollywood.�

B S Radha Krishnan brings along with him decades of

experience in Film, Entertainment and Television Content

business.� Mr.� Chandran Rutnam, a veteran from the Sri Lankan

Film industry has joined forces to look after the creative

sideofthebusiness.AdepTdistributedALIMANKADAtothe

globalmarket.ALIMANKADAakaTheRoadFromElephant

Pass, produced and directed by Mr.� Chandran Rutnam has

paved the way to forge an the alliance between the business

heads.� Bringing them together has created a greater belief

in Sri Lanka’s capacity to be an international film production

destination with both in front of camera and behind the camera

talent from Sri Lanka.�

ADEPT supports local talent.� Its mission to provide creative

artistes international exposure; ADEPT has funded and

produced 3 crossover films in a short span of 9 months, “Flying

Fish”, “Three Wheel Diaries” and “Bora Diya Pokuna”.� “Flying Fish”

has won international recognition and is currently doing the

festivalcircuitsinEuropeandUSA.Thelaunchpadcreated

by AdepT has helped Sri Lankan talent to get International

recognition and creative minds to explore possibilities outside

their country.�

AdepT is in dialogue with “Bubble Factory” which belongs to

Mr.SidSheinbergofUniversallegacytohandleAepT’sglobal

distribution business.� Veteran Hollywood producer Mr.� Paul


Scenes from “A Common Man”


Asia Digital Entertainment (Private) LimitedAdepT’s productions were internationally recognised during the year 2010 and 2011 with nominations and awards for excellence at the New York and Rotterdam Film Festivals

Mason is one of AdepT’s Executive Producers for its maiden

InternationalProduction,titled“ACOMMONMAN”,starring

Sir Ben Kingsley of “Gandhi” fame and Ben Cross of “Chariots of

Fire”.� The principal photography is complete with the post-

production in progress.� The film is due for global release in the

next quarter.� It is directed and edited by Mr.� Chandran Rutnam.�

In the pipeline for production in 2011/2012 are a big budget

Hollywood production for which casting is currently under

consideration, and two Sinhala feature films which AdepT aims

to be trend setters in the Sri Lankan mainstream movie market.�

AdepT’s productions were internationally recognised during the

year 2010 and 2011 with nominations and awards for excellence

attheNewYorkandRotterdamFilmFestivals.TheCompanyhas

access to the best pre and post-production facilities across the

world as well as equipment providers, although it prides itself

on utilising purely Sri Lankan talent for production purposes in

view of the need to enhance the human capital of the nation.�

Plans to enhance the entertainment profile of the country

through the re-ignition of the desire for cinema-going as an

entertainment form is another aspect of the AdepT’s plans.�

Towards this end, AdepT plans to upgrade key Cinema Theatres

across the country, to the digital projection experience.�

After successful implementation, AdepT shall be in a position to

bring down the cost of film distribution in Sri Lanka to

a minimum.�

AdepT is also establishing a television content production arm

that expects to create content for local and regional television

business with a view to enhance the quality of television

content.� In the medium term, AdepT perceives content to

mobile as a key value generator especially in view of the high

mobile penetration in Sri Lanka.�

Scenes from “Flying Fish”


Management Discussion & AnalysisInformation Technology as a strategic resource

A Quantum Leap

Asia Capital PLC views IT as a strategic enabler that lends the Group a competitive advantage for sustainable growth.� IT therefore essentially serves as a differentiator, allowing the Group to carve its unique niche through technological innovation in an industry that is highly competitive.�

With IT used as a strategic resource, the Group’s IT strategy has been well aligned with the overall business strategy with a view to optimize IT resources to support and in effect achieve operational excellence and competitive advantage .� Since the financial year 2009/2010 the Group has formulated a strategic

IT road map that seeks to facilitate greater growth across the core holdings and business sectors, a transition that allows for a more cohesive approach to IT implementation.� A macro, birds-eye vision of consolidated Group business needs is therefore met through an integrated IT strategy that aims towards sustaining strategic and operational business objectives while delivering group wide synergy.�

Particularly as a result of the Group’s focus and promotion of a performance-based culture, in the year under review, Asia Capital invested in the implementation of best in class data warehousing/mining tools and solutions for strategic and tactical management.� Implementation of Oracle BI is

targeted for the forthcoming financial year, and a phased out implementation approach will place Asia Securities as the focus for the year, whilst the solution will be cascaded to support other subsidiaries over the next two financial years.� Oracle BI will elevate and support the Group’s overall drive for future growth through its capabilities role as a management based analytical tool.� Its ability to assist towards identifying critical information through data mining, predicting changing market trends and the introduction of dimensionality to data repositories thereby establishing historical patterns are some of its key capabilities.�

The Group also intends to implement Oracle E-Business Suite during the financial year 2011/2012 as an outcome of identifying the need for an integrated, best in class Financial Management solution that takes a pervasive Group-wide consideration of the business.� Whilst Oracle EBS will be implemented across core sectors in 2011/2012, the application will be phased out for implementation across all sectors in the medium term.�

In view of the large investments into IT and the degree of sophistication of the IT function at Group level, the need for greater governance of IT processes was a key area of focus during the year.� The Group was cognizant of the


need to enhance resources and infrastructure towards creating capabilities and competencies for the successful implementation of the strategic IT road-map.� Thus, during the year under review efforts were undertaken to expand the resource base especially in IT expertise.� Hence, the existing IT team was further strengthened through the infusion of new blood.� The new IT resource base will augment governance, planning, IT security and enlarge the capacity for software development and operational competencies.�

From a sector perspective, IT played a fundamental role in upgrading the business capabilities of Asia Securities and Asia Asset Finance.� An upgrade in IT infrastructure was of critical need during the year at Asia Securities predominantly as a result of the surge in business activity (the outcome of a larger base of clients and heightened market activity).� As such, in 2010/2011, Asia Securities data centre assets were enhanced at an investment of Rs.� 20 million.� To better facilitate customers, investments were made towards trading engines, data communication, security solutions and power

infrastructure.� Similarly, bandwidth for online trading engine access was enhanced three-fold to meet the requirement of an enhanced online trading customer portfolio.� By broadening the pipeline of data communication links, Asia Securities was better able to facilitate smooth connectivity for trading.� Improved Risk management processes and Disaster Recovery strategies were put in place during the year and this process of continually augmenting the strategies in place is an ongoing and consistent strategy to create a scenario of minimal risk.� During the year, Asia Securities continued to invest into trading solutions to supplement the existing applications.� The addition of the Mubasher trading application and the upgrade of the CDAXapplicationhavebothservedtowardsaddingvalueto

internal and external customers.� In going forward, by identifying strategic information systems for stock trading , portfolio and risk management, data warehousing and Business Intelligence and financial management systems Asia Securities will garner greater growth and returns.�

IT delivered benefits to Asia Asset Finance by way of a few strategic initiatives.� The ongoing implementation of a leasing and hire purchase solution during the year as core business solutions for the Company would serve as impetus for the future growth of this business entity .� This will be further enabled through the on-going implementation of Oracle EBS integrated with front end core business solution in this business sector .�

Investor Access Asia (IAA) is credited as the Group’s subsidiary responsibleforthedevelopmentoftheCDAXtradingapplication.� During the year, the evolving landscape of the business was revisited with a view to identify opportunities for future growth.� Subsequent to a series of intensive strategy

formulation sessions, strategies were developed to expand the company’s product and service portfolio to cater to an evolving capital market.� Thus, in the short to medium term, Investor Access Asia will be repositioned to meet the needs of a broader capital market through specialist solutions.� With the backing of a formidable team, the Company will embark on aprojecttorevamptheCDAXapplicationanditsbackofficesolution–DACS.Tosynergizewiththeoverallrepositioningofthe Company, IAA will be rebranded in the upcoming financial year with a view to leverage the Group’s brand strength and affinities.�


Management Discussion & AnalysisStrategic Approach to Human Capital Management

A Quantum Leap

The Group adopts an integrated approach to human capital where human capital management is directly aligned to the overall business strategy.� Human capital remains one of the key assets of the Group and it acknowledges this resource as strategic to the future growth of the organization.� In this respect, by routing business strategy through an adaptive approach to human capital management, the Group perseveres towards the achievement of strategic objectives and common goals.� Thus, Human Capital Management is placed at the top of the Group’s list of priorities.�

Every aspect of the Human Capital Management process is viewed within the framework of the overall strategic business plan.� This approach has proven in efficacy especially in light of the widening scope of activities of the Asia Capital Group.� With a diverse range of resources required for the management and operation of the Group, a Human Capital Management strategy that best identifies the current and future needs of the Group is seen as the most conducive strategy for the future viability of the Group.�

HR Capital GrowthIndicator

10/1109/10

555

684

Hum

an C

apita

l

HR Service PeriodAnalysis

35%

49%

12%4%

Less than 1 year

1 to 5 years

5 to 10 years

More than 10 years

HR CategoryAnalysis

23%

27%

50%

Management Sta�

Executive Sta�

Non-Executive Sta�


As such, the Group is cognizant of the strategic resource requirements when undertaking recruitment and selection.� Through a well planned and coordinated process, the Group strives to select the right person at the right time for the right job through a comprehensive screening, interviewing and referencing process.� Young and fresh talent is welcomed and integrated into the Group through a recruitment program that targets schools, universities and professional bodies and the Group’s internship program which offers internship opportunities in diverse disciplines.� These structured approaches to talent infusion have been focal to the development of the Group’s Human Capital and the future growth.� A culture of open communication defines the success of Asia Capital.�

Human capital development is viewed at Group level as a business led approach to develop human resources through learning, educating and training within a strategic framework.� At Asia Capital the core objective of human capital development lies on the premise of optimizing investments

to promote the achievement of a balance of Group and personal objectives, whilst fostering a conducive platform for growth.� The Group utilizes intensive on the job training, action learning and one to one coaching as the primary internal training techniques, which have proven to impact business results.� Training and development is viewed as a necessary investment towards enhancing productivity, motivation and the net value of human resources.� Thus, a structured training program that encompasses a range of training techniques and addresses diverse training needs are formulated annually.� In 2010/2011, 242 of the Group’s employees received training both within Sri Lanka and overseas based on pre-identified individual and corporate needs.� The Group recognizes that talent management is key in maintaining the momentum at which the corporate can grow in the future.� By identifying talent bottlenecks and blockages, the Group maps out a cohesive training and development plan to overcome and clear talent related concerns.� The Group also supports its employees and motivates towards acquiring memberships in professional

HR GenderAnalysis

69%

31%

Male

Female

HR Employment StatusAnalysis

62%

38%

Permanent

Probationers /Trainees / Contract


bodies as it believes that such memberships enhance the quality of HR through greater exposure to global trends and developments.�

Local Training Programs1.� How to win the share market

2.� Workshop on economy changes

3.� Financial regulations & ethics

4.� Effective ways of team building

5.� Resorting trust in financial service

6.� Statistical forecasting techniques

7.� World market overview & outlook for 2011

8.� Workshop of Sage Accpac software

9.� Board room governance

10.� Strategic Performance Enhancement

11.� Member regulations for investment advisors

12. NewInsightsintoEmployeecoaching,Mentoring&Counseling

13.� Effective Credit Approvals & Credit Risk Management

14.� Human Resources Development through Disciplinary Management

15.� Annual Anti-Money Laundering & Countering the Financing of Terrorism

Foreign Training Programs1.� Portfolio Performance Measurements & Attribution Analysis

- Singapore

2. CompanyValuationModeling2010–India

3. FALIA–ProductDevelopmentStrategyCourse–Japan

4. 05thAnnualCorporateCommunicationForum2010–India

5.� Munich Re Life Executive Forum

Attuning new employees to the Group’s corporate culture is viewed as a fundamental step towards the creation of a “like-minded” team and is deemed critical in assisting towards mutually beneficial long term relationships.� Towards this end, the Group in 2010/2011 launched a formal Cross Sectional Induction Program as a means to structure a corporate socialization process.� This has been further supplemented by an informal mentoring system that has assisted towards instituting core values and in fostering greater cohesion amongst team members.�

As an organization that is achievement oriented, the Group places performance management at the crux of its management style.� Performance management techniques aretailoredtoassessdifferentsegmentsofemployees–fromtrainees, employees on probation, contract and permanent –andarethereforespecifictotheskillsandexpectationsof each segment.� Performance is evaluated with reference to predetermined goals and targets and conducted by

Management Discussion & AnalysisStrategic Approach to Human Capital Management (Contd.)

A Quantum Leap

Employee Friendly And Conducive Working Environment Annual Staff Get-together also held in December 2010 at Heritance Ahungalle


sectional heads and immediate superiors.� The outcome of the evaluation is thereafter used for reward, recognition and human development purposes.� With incentives, increments and training needs determined through the performance evaluations, the process remains critical to the future development of the Group’s human capital.� In an effort to encourage the employees to exert efforts towards achieving corporateandstrategicgoals,severalmeasures–KPI’sandbenchmarks - have been established to assist towards the creation of a performance driven work ethic.� In planning for the futureleadershipneedsoftheGroup–especiallyinperspectiveoftherapidenlargementofthescopeofGroupactivities–succession planning too remains a core area of focus.�

The remuneration and reward policy of Asia Capital PLC is set on par with the rest of the industry and is in line with State Statutory regulations.� The remuneration and rewards are performance driven and the policy is structured to drive productivity and to improve individual and team contribution towards the achievement of organisational goals, in tandem with recognition of individual excellence.� Performance is recognized and rewarded through the granting of financial and non financial incentives as a token of appreciation for the passion imparted and the excellence achieved.� The remuneration structure is reviewed periodically to ensure equity and to guarantee market competitiveness.� In addition to remuneration the Group also provides a range of benefits and incentives to staff including bonuses, surgical and hospitalization insurance benefits, accident and life insurance benefits, cash gifts on occasion of a birth, cash donations for death of immediate family members, free meals during extended work hours, festival advances and free uniforms.�

Moreover, the upholding of an “open door policy” allows for employees at every level of the organizational structure to have access to and communicate openly with the Senior Management.� The Group is a firm believer in the ideology that sharing of information is vital in creating and maintaining

healthy employer/employee relations.� To this effect numerous events are organized throughout the year with the intention to create a forum for engagement and interaction across all levels of the organizational hierarchy.� The Annual Dinner event which was organized in October 2010 with the Group’s Chairman was well attended by staff and served as an avenue to strengthen the Groups’ efforts towards establishing healthy employee relations.� In addition, events with the CEO of Asia Securities Pvt Ltd and COO of Asia Capital PLC in February 2011 also served towards the creation of an open platform for employees to interact with the Senior Management

The Group endeavours to create a scenario wherein “work life balance” is achieved by its employees.� A healthy lifestyle and a healthy work life are two critical areas of focus in terms of optimizing employee productivity.� The Group believes that by achieving “work life balance” and by maintaining a healthy lifestyle, employees will optimize their productivity at the workplace.� In 2010/2011, the Group persisted towards the creation of a conducive work environment which contributed to minimized fatigue, enhanced productivity and the development of an energetic, healthy workforce.� The Group’s sports club, subsidized gymnasium fees, and participation at Cricket, Rugby and Badminton tournaments contributed towards an overall openness to well-being and health.� The continuation of the staff accident and life insurance scheme, hospitalization insurance scheme and the reimbursement of OPD prescriptions, have guaranteed our diligence and holistic approach towards maintaining healthy human resources.�

Setting up of cross functional teams for work assignments and short term special projects has enriched the team spirit of the Group’s human capital and assisted towards the creation of team cohesion.� The efforts exerted by the cross functional teams in the project “Helping Hand for Flood Victims” in the Eastern provinces in February 2011 was an example of the capability and the readiness to accept challenges and to deliver results.� Events in the annual event calendar such as the Kiddies Christmas Party held at the CH&FC Grounds in December 2010, and the Annual Staff Get-together also held in December 2010 at Heritance Ahungalle continued to enhance the overall team spirit of employees, infusing greater bonding with the Group and the many members of the family at Asia Capital.�

Kiddies Christmas Party held at the CH&FC Grounds in December 2010



CORPORATE SOCIAL RESPONSIBILITY


Corporate Social ResponsibilityA Quantum Leap

“Glorious Jaffna aims to break the cycles of communal violence that have plagued Sri Lanka by empowering the next generation to overcome grief caused by violence and the war through the expression of love.�”

Case Stories from Jaffna at a Glance

Yathusha from Allaipiddy was a 9 year old little girl who was traumatized seeing her father losing a limb due to a mortar blast, a common occurrence during the three decade long ethnicconflictthattookitstollonSriLanka.Nowahappychildwith an aim to be a doctor when grown up, she attends school regularly and full of joie de vivre.�

Vithushan from Anaikkoddai, is a 12 year old child who has suffered a lot due to the war as a result of losing all his immediate family members, was deprived of the affection, love and care from his parents, had no hope & purpose in life.� With scattered dreams and hopes he wanted to become a mason but after some time he has more ambitious dreams to be fulfilled in life”

Refer page 64 for Yathusha’s story Refer page 65 for Vithushan’s story

These positive changes were realized when these two, like many other kids, were sponsored by the Glorious Jaffna educational sponsorship program. Glorious Jaffna will ensure that these positive developments will be sustainable.


Asia Capital, driven by the vision and direction of Chairman Mr.ManoNanayakkaracontributestoGlorious Jaffna, a charity that finances a platform focused on empowering children affected by the war, so they will be able to optimize their potential academically and socially.� These children being a part of the future generation that will contribute to the betterment of Sri Lanka deserve an opportunity to put their tragic past behind and embrace the future with hope and stability.�

The war in Sri Lanka is over and the country is looking forward to a new beginning after many years of destruction and trauma.� Over three decades of conflict, which devastated lives, hopes and marred the social fabric of the communities living in these provinces the Children were the main demographic segment affected by three decades of conflict, which devastated lives and hopes and marred the social fabric of the communities living in these provinces.

Glorious Jaffna aims to achieve two significant goals regarding the empowerment of children affected by the war.

• Byprovidingeducationalsponsorship,therequiredqualitativelevels of their education will be sustained.� This will be a great leveler that will remove disparities arising out of social status, ethnicity, religion etc.� Further, these children will not be burdened with insecurities regarding continuation of their education.� Therefore Glorious Jaffna will put the children on a better footing to advance themselves academically.

• Creatingafosterparent-childrelationshipthatwillbroadentheperspectives of these children regarding people outside of the North,whichwillmakethemlesssusceptibletomyopicandracist prejudices.� Hence Glorious Jaffna will enable these children to advance themselves socially.

“It is said that people who do not learn lessons from history will undoubtedly repeat those mistakes.� We need to deal with the aftermath of the 30 year old war…”Mr. Manohan Nanayakkara, Chairman,Asia Capital PLC at the launch of Glorious Jaffna Charity For the full speech please refer pages 55 - 59



Operational Overview

Selection of Children

Glorious Jaffna finances educational resources for children who fall into following selection criteria.�

• Children6-12yearsold,affectedbythewarinVanni2009,whoarenowresettledintheJaffnaDistrict.

• Whohavelostboththeirparentsorotherwise,eitherfatheror mother is injured/handicapped/missing/detained.�

Operational infrastructure

Glorious Jaffna is assisted by the Ministry of Education, and Caritas Sri Lanka, in carrying out the Educational Sponsorship program.� These two entities are vital cornerstones of the implementation infrastructure to carry out needs assessment, monitor the progress of the children and resource distribution.�

Flow of Resources for Educational Sponsorship from Asia Capital to Bene�ciaries

ASIA CAPITAL PLCAsia Capital transfers funds to Glorious Ja�na

CARITASCaritas is the implementing

partner & carries out activities under the direction of GJ

BENEFICIARIESwar a�ected children in the Nothern Province

MINISTRY OF EDUCATIONMinistry of Education works along with

GJ. Teachers, Principals & Ministry O�cials provide necessary support to GJ

1.1Sponsorship

by other entities*

1Funds for Educational

Sponsorship

2Funds to maintain

operational Infrastructure

1.2500 children are

currently sponsored by ACAP

2.1Entirely borne by ACAP

as a CSR Initiative

Funding Structure of Glorious Jaffna Charity

* It’s only LKR 2500 per month as sponsorship per child and the sponsor must pledge for a minimum time frame of one year. The total sponsorship is allocated to provide for educational needs with a savings component and does not contribute to meeting operational overheads of the program

i.e the sponsored child gets 100% of sponsorship

1 Funds for Educational Sponsorship

1.�1 Glorious Jaffna has created a platform whereby individuals and organizations can come on board to sponsor a child.� The total sponsorship will go directly to the beneficiary.�

1.�2 Asia Capital is sponsoring 500 children at present and the number of children will be increased further in future.�

2 Funds to maintain operational infrastructure

2.�1 Operational infrastructure is fully borne by Asia Capital as a CSR initiative.� Operational infrastructure costs may increase in future due to the increase of number of children.� However ACAP will bear these costs if the need arises.�

Some of the children sponsored by Glorious Jaffna, Tellippalai Some of the children sponsored by Glorious Jaffna, Velanai


Educational Sponsorship Resource allocation

Educational sponsorship per child for a month is LKR 2500.This will cover the following categories.�

• Thebooksthataregivenspecificallyforeducationalpurposes which are not provided by the government.� These include workbooks, additional reading books etc.�

• Stationeryitemsincludepens,pencils,erasers,compassboxes etc.�

• Catch-upeducationtocovermissedareasofsyllabusandadditional coaching to uplift their present standards.� E.�g.�: If a child is weak in his/her English, tuition classes will be arranged in order to assist that child.�

• Additionalcoaching.ForspecialtalentslikeMusic,Art,Dancing, Literature, Sports etc

• AsavingscomponentwhichisdepositedtoaMinor’sSavings Account, that the child can access once he/she reaches adulthood.�

Salient points on efficiency and effectiveness Glorious Jaffna for Potential Donors

• Thesponsorshipfundingwillcontribute100%toempowerthe child academically and socially.� Therefore there is no drain from sponsor’s funds to meet infrastructural expenditure.� Infrastructure expenditure is entirely borne by Asia Capital PLC .�The sponsor is benefited by the platform financed by Asia Capital PLC.�

• Asponsorisallocatedoneormorespecificchildrenwhichenables them to develop long term, intimate and nurturing relationships–similartothebondsbetweenafoster-parent and child.� The child benefits from the relationship by broadening his view of life outside his surroundings via sponsor’s input along with the resources provided to advance academically.� The sponsor gains by the precise knowledge of how, where and on what the funding is utilized for the development of his/her sponsored child.� Hence wastage of resources is minimized and accountability is established.� The sponsor is also updated constantly with their child’s academic and social progress.�

A child from Jaffna receiving study pack for September Distribution of study packs at Chankanai


• ThisflowofinformationtotheSponsorregardingachildi.e.on resource allocation and academic and social progress is via an online system that the sponsor can access anytime, from anywhere in the world.� The real time nature of information updates paves the way for timely changes to be carried out for the betterment of the child as per sponsor’s wishes.� Further if sponsor wishes to visit the child that can be arranged without delay due to the extensive operational infrastructure maintained by Glorious Jaffna.�

• ThisonlinesystemalongwiththeOperationalInfrastructureinNorthernprovinceofSriLankaensuresanoptimumlevelof efficacy is maintained in carrying out needs assessment, monitoring the progress, distribution of resources and transferring information to all stake holders.�

• Glorious Jaffna is a fully audited charity with transparency to all stake holders.�

Please visit www.gloriousjaffna.com for more information and how you can be a part of this noble cause. Please help a deserving child by ‘putting a bit of Jaffna into your life’.

How it all started

The Glorious Jaffna Book and Charity

Glorious Jaffna was launched with the commissioning and publication of a quality coffee-table pictorial titled the same, which offers a 180-page comprehensive photographic essay on the peninsula and its people.�

The book depicts an assortment of topics ranging from personality portraits to landscapes, devotees, and places of religious worship, spices and the colorful culture and traditionsofJaffnabringinginsightintotheuniquecultureof the communities residing there.� The combination of elements thoughtfully expressed through camera of Tharindu Amunugama and the words of Sunela Samaranayake.�

The book was launched in January 2011 with the intention of “putting a little bit of Jaffna into our lives” by helping war affected children in Jaffna and other war-torn areas of the Northern Province of Sri Lanka. All proceeds from the sale of the book will contribute to funding the educational sponsorship program carried out by Glorious Jaffna.�


A sponsor is allocated one or more specific children which enables themtodeveloplongterm,intimateandnurturingrelationships–similar to the bonds between a foster-parent and child.�

A child from Chankanai under Glorious Jaffna program Glorious Jaffna staff with some sponsored children from Tellippalai


Launch Of Glorious Jaffna - 04th January 2011 - Atrium - Cinnamon Grand: speech made by Chairman Mr. Manohan Nanayakkara.

Ladies and Gentlemen, thank you for being here.� I am pleased to see all of you here.� I must say we kept the invitation deliberatelyvaguewithacatchytitle.PutalittlebitofJaffnain your life.� On the face of it, it does not reveal much.� I guess what I am going to talk about is what do we mean when we say put a little bit of Jaffna in your life.

Today is also the launch of our CSR initiative for 2011.� We propose to raise awareness to assist in educating 10,000 childrenofJaffnaandgetgreaterinvolvementbythepeopleinthe South in those kids lives.�

I would particularly like to welcome His Eminence Bishop Duleep de Chickera Bishop of Colombo, Mrs.� Lakshman Kadirgamar, Mrs.� Swarna Amaratunga the mother of my school chumChanakaAmaratunge,Mrs.TiruchelvamandMr.NilanthaFernando,sonofmyoldHeadMasterMr.JSLFernando.

The purpose of this event is to launch our book Glorious Jaffna and create awareness of the role each one of us can play to ensure that communal violence that beleagured and disrupted most of our adult lives are never repeated again. The book Glorious Jaffna was an accident.� I discovered that Mr.� Tharindu Amunugama who joined me using camouflage of being a mathematician was actually a poet.� He has a passion

for photography.� Ladies and Gentlemen, he happened to show me some of his work as a photographer and I was captivated by the images and the rich colors of his photos.� I asked him what kind of camera he uses .� It was one of these little portable tiny cameras and I offered him one of my old cameras that was not in use and was gathering dust on the shelves.TharinduAmunugamatookphotosofJaffnaonhisnext trip there and I found that one particular shot of Palmyrah trees around Elephant Pass totally captivated me and I asked him whether it was good enough for publication purposes.� He said perhaps not.� I found that the camera I had gifted him was not of an appropriate quality to produce a reputable book and I volunteered to buy him a new one of appropriate quality in the conditionthathetookphotosofJaffnaandproduceabookonJaffna.Itwasahappyaccidentforbothofus.

The book has been priced at Rs.�4900/- retail and only for today it is being offered at a discounted price of Rs.�4000/- and for those who wish to purchase on your credit card, a special credit card machine has been installed for your convenience.� So you see, we have thought of everything.� The proceeds of the sale of the book is to assist two established charities already working in Jaffna.OneistheHumptyDumptyFoundationwhichprovidesmilk to young school children.� The milk is purchased locally from the community.�

It not only encourages children to come to school but also improves their concentration to learn

HowtoputabitofJaffnaintoyourlifebyempowering the next generation through the expression of love.�.�.�


All of the funds go back to the community for a second round of positive impact.�

The other charity CARITAS is closer to my heart because the funds are used for the education of little children.� The cost of supportingtheeducationofachildisUS$270perannum.

Asia Capital has set our CSR goal for next year to raise awareness to set in motion a series of activities to obtain contributions from the people who are near and dear to us to finance 10,000 schoolchildreninJaffna.

Asia Capital is in one sense a very unusual company.� My majority shareholder, Dato Vijay Eswaran is a third generation TamilexpatriateMalaysianNational.HisgrandfatheroriginatedfromJaffna.Weareveryunusualinthesensethatwearea company where the senior management consists of all ethnic races.� Myself as Chairman and Managing Director, I am Sinhalese, Mr.� Sabri Marikar who heads our Securities Company is a Sri Lankan Moor, Mr.�Rajiva Gunawardena who heads our FinanceCompanyisaSinhalese,Mr.RamalJasinghewhoheads our Insurance Company is also a Sinhalese and Stefan Abeyesinhe who heads Asia Wealth is of mixed parentage.�

I am not committing a specific amount from the Company today for these charities as the company is governed by strict rules and I have to get the shareholders approval at the next AGM to donate funds for these charities, but I will recommend that we give a sizable contribution and I expect my shareholders and my board of Directors to support me.�

Asia Capital though relying on Caritas will take full responsibility to channel and to utilize these funds to the two charities involved by directly recruiting a person whose job will be to full time monitor the funds and provide feed back information to the sponsors.�

I wish to dedicate the book to several people.� First of all to Dato Vijay Eswaran, my majority shareholder who happens to pop into my life at crucial moments and has assisted me to achieve my full potential.� Also I wish to dedicate this book to Mr.JSLFernandowhowasmyHeadMasteratSt.Thomas’Prep.

IbelieveJSLwasafarthinkingeducationalistwhosawtheethnic division on the horizon and did his best to bond the multi–culturalstudentstogether.Myparticularsetofco-horts included Mr.� Chanaka Amaratunga who was a liberal politician and outstanding human being and Richard de Zoysa a journalist and dramatist who I believe was the most talented person of our generation .� Richard was cut down in the prime of his life in an incident which got a fair amount of prominence.�

JSLensuredthatwewouldneverberacistbyensuringthatthe three streams met daily as a single group.� There was no Tamil class, no Sinhala class, and no English class.� We studied separately in Tamil, Sinhalese and English streams based on our mother tongue but we identified ourselves as one class and one group.� Every day in the morning we got together for worship and for assembly.�



I would also wish to dedicate this book to my father and several other quiet Sinhalese heroes.� When we look back on the events of the 1983 ethnic violence, we tend to forget the Sinhalese neighbours and colleagues who did their utmost to protect their Tamil brethren.� One of them was my father who journeyed through mobs to protect at least a hundred Tamils .� I do not want all these quiet Sinhalese people to be forgotten.� In addition, my father was also a man with a massive heart.�

Another person I wish to recognize is Carlyle de Silva my father-in-law who was the OIC in the Badulla Police.� After the 1977 elections he put together a plan to protect the Tamils in the Badulla district and the then Superintendent of Police commended his actions, stating that if not for Carlyle de Silva’s bravery.� Badulla would have been a holocaust.� However he had to pay a heavy price for his actions .� He was denied of all hisduepromotionsandheexiledhimselftoPapuaNewGuineawhere he rose to the rank of Chief Prosecutor and Head of the CID.� He was also the advisor to several Prime Ministers there.�

I wish to dedicate this book to the 2 young people who were the authors of this book who worked tirelessly at no additionalrewardotherthantheirpassionandalsotoMrs.JeanArasanayagam who allowed us to use her poetry to glue the book together.�

I would like my Tamil Brethren to put together a book on the goodness of their Sinhalese brethren during the awful period ofJuly1983.YoumayrememberHitlerkilled6millionJewsbut

those of you who have seen the film Schindlers list know of the gratitudetheJewshadforonecaringGerman.

The 1983 ethnic violence was a terrible thing which was damaging to all of us whether Tamil or Sinhalese.� Co-incidentallyIstartedmycareerinJuly1983andtookonmylast job when I took over Asia Capital the day before the war ended.�

I sometimes feel I have come a full circle and in a sense I am a product of the war because my entire career has been overshadowed by the war in some sense or the other.�

JustlikemyTamilbrethrenwholeftthecountryindisgust,ImyselfleftthecountryfortheUSin2003withtheideaofnotreturning again.� In 2004, I left the country once more.� This time more permanently to migrate to Australia when the interminable war was not ending.�

By a pure co-incidence my majority shareholder bought into Asia Capital a day before the war ended in May 2009 and we have been very successful over the past 18 months.� I want to make our CSR programme worthwhile and tangible and a meaningful one.� I want to build on the outstanding pulpit provided by Tharindu and Sunela .�I am thankful to both of them for providing me the opportunity to build our CSR programme from that solid base.�

I am pleased to see all of you here today and I consider myself very lucky to be here at all.� I almost did not make it As some


of you may be aware, on the 26th of October I was seriously ill.� I almost did not make it.� It was a close call and it was hard work getting up here.� The thought of the 10,000 kids needing assistance kept me going.� Hence I am here in a wheel chair.� Some of my staff I understand have nick-named me “ the wheel chairman”.� Other Chairmen have bag carriers.� I am fortunate to walk around with “ 2 chairman carriers”

A couple of days ago, my wife appealed to my conscience as to why I was going to such expense in having this event at a 5 star hotel as it is meant to assist childrens education.� She was wondering if it would be a wasted expense.� I had to defend my venue and for my defense I used a term used by a very wise old man called Socrates’ The term “exordium” which I believe means “bait” and I said “ I have got to have these people interested in the programme” To obtain commitment I need to put my audience in a receptive mood.� All the food and drink out there is the bait to get your attention.�

My wife did not look too convinced, but she did not say anything.�, Whenever you are stuck it is always good to use a fairly large word to get out of it.�

It is not possible to be communal if you truly appreciate the culture and find joy in the other community’s culture. Asa9yearoldchildIwenttoJaffnaforthefirsttime.Ibelievethat experience changed my life completely.� When one of my colleaguestoldmethattheJaffnalibrarywasburnedIcriedalong with him.� Hence the title of our programme “ Put a little bit of Jaffna in your lives”. Once we do that, we can never go back down that racist path again. If you turn to page 123 of the book you look into the eyes of little Yathusha.� I learned that her father who is a toddy tapper had lost his leg in the war due to a mine and was finding it difficult to make his living.� She is the same age as my young daughter and having lost the use of my left leg I can relate to her plight.�

I can still making a living despite losing a leg , but what can a one-legged toddy tapper do ? He has no resources.� My wife and I decided to finance Yathusha’s education for the rest of her life and my 16 year old daughter Keshini Davina has met her today and has just been given the responsibility of looking after her for the rest of her life.� After becoming sisters, do you think eitherJerushaorKeshinicaneverbecomeracistagain.Keshini,pleaserepeatafterme“let’sputalittlebitofJaffnainourlives”.AllyouNanayakkarabratsoutthere,pleaserepeatafterme

“It is not possible to be communal if you truly appreciate the culture and find joy in the other community’s culture.�”



“Ladies and gentlemen, this project requires more than money from you.� It requires you to get involved in the child’s life intimately -ThatishowyouputalittlebitofJaffnainyourlife.”

“let’sputalittlebitofJaffnainourlives“.Ladiesandgentlemen,canyouallpleaserepeatafterme“letsputalittlebitofJaffnainourlives”.Comeonallofyou“LetsputalittlebitofJaffnainourlives”.Alltogethernow“LetsputalittlebitofJaffnainourlives”.� Let’s have 10,000 Yathushas and 10,000 Keshinis to ensure that we will never go through another horrible period like that again.�

IalsowishtodedicatethisbooktoDr.NeelanTiruchelvamwhom I had the good fortune to be associated with in negotiating the Galle Harbour project .� He was a wonderful human being I also wish to dedicate the book to Mr.� Lakshman Kadirgamar a great human being with whom I had the occasion to chance upon when I was working for the Government.� A third person I wish to dedicate the book to is the late Mr.� Ashraff with whom I had my differences but discovered that these differences did not matter.�

It is said that people who do not learn lessons from history will undoubtedly repeat those mistakes. We need to deal with a aftermath of the 30 year old war. Many of you are not aware that Asia Capital has a subsidiary called Asia Digital Entertainment (Private) Ltd.�, We have recently produced a movie called “Flying Fish” which was shot by a young director from the East Coast.� The narrative of the movie is the impact the war has on children and the innocent.� Flying Fish was made by Sanjeewa Pushpakumara, a young Sinhalese.� It is a virtual travelogue on the East Coast .� It is to be shown at the RotterdamFilmFestivalfrom26thJanuaryto06thFebruaryand has been nominated for the Tiger award which is the premier award at that festival.� It is one of only 12 nominated movies to be shown at that film festival.� It has already been shown in some parts of Europe and we hope to sell the international rights soon.� I am really very proud of our little investment.� I would like Asia Capital to do a little bit more than sell securities, insurance policies and lend money and take deposits.� As a Company we need to become more relevant to our environment and what is more relevant than the war and its aftermath.� I believe the movie will really change the thinking in a lot of people who see the movie.� Ladies and gentlemen, pleasemaketheJaffnaprojectareality.

I would also like to announce today the company’s decision of putting together the finances for another film titled “Sidhartha the Buddha” a joint Sri Lanka/India/ Malaysia co-production to be backed by a Tamil Financier and made by a Tamil Director Mr.� Chandran Rutnam, primarily targeting the South Indian market.�

JustasmuchasGlorious Jaffna is a Sinhalese attempt to appreciate Tamil culture, Sidartha the Buddha is a Tamil attempt to appreciate the Sinhalese culture.�

It is good to see Fr.� Chickera here.� He got me out of several adventures when I was a student at St.� Thomas’ College where he was the chaplain.� I am hoping to get his help on this adventure as well .�

Mrs.� Swarna Amaratunge who is the mother of one of my co-horts Chanaka Amaratunga who had an illustrious academic career and who was a budding politician.� Chanaka was taken away from us at a young age, but I know he would have cared a great deal about this project of ours if he was alive today.�

The book is being offered today at a special rate of Rs.�4,000/- In addition it comes in a very attractive presentation box which thereaftercanbeusedtostoreyourJaffnacigars.

Finally, I would like to announce that we have a commitment for almost 200 children.� Dato Vijay Eswaran has committed to finance 100 children.� I am personally taking steps to finance 50 children.� In addition, members of my family have agreed to sponsor 20 children.� This takes us upto 170 and I hope before you leave the premises tonight, I would have 200 commitments.� That is 2% of our target.� Asia Capital is putting up a website to keep all the donors informed about the progress of the children so that they are fully involved with their sponsored child.� Ladies and gentlemen, this project requires more than money from you. It requires you to get involved in the child’s life intimately - That is how you put a little bit of Jaffna in your life.


Glorious Jaffna Staff with volunteers

Children from Thalayady with educational material

Children from Chankanai & Kayts

Distribution at Sandilipay

Distribution at Tellippalai Happy children at an Assessment in Tellippalai



Geetha distributing study packs for September, Point Pedro

Fr. Bernard from Caritas at a distribution in Chavakachcheri

Mr. Ajanthan from Caritas at a distribution, Point Pedro

Geetha, Dushan and a volunteer with Yathusha and Thanu

Dushan distributing study packs for September, Sandilipay Geetha distributing study packs for September, Point Pedro

A few moments from the journey so far.�.�.�


“Glorious Jaffna is a captivating coffee-table pictorial that depicts a once tranquil district which became a springboard for a senseless secessionist conflict.� It is also a tribute to a resilient people and picturesque milieu that had been transformed into a war-ravaged landscape of rebellion, rubble and ruin rising from the ashes….�

………The collection offers a veritable assortment of topics ranging from personality portraits to landscapes, devotees, places of religious worship, spices and its colourful culture and traditions.�.� The combination of elements here is powerfully expressive as his camera appears to pan into idyllic reverie, deftly embellishing those special elements of atmosphere and mood….�.�



Among our tropical island’s localities which have been suffused for centuriesbycalmandcontentment,Jaffnahadbeenthebeauideal.

….�.�The compilation swivels with images from the heart-warmingly happy to the starkly melancholy with a moving candour.� Here the photographer as artist conjures up a cluster of personality portraits of ordinary yet dignified personages including the venerable profilesoftheruggedlygrizzledpatriarchsandstatelygrandedamesofJaffnasociety.Onecannotbutfailtobetransfixedbytheeloquent intensity of hope in their expressions instilled by their robust faith in simple religious values.� The children are featured in harmonised composition that portrays them in fascinating allegories of laughter, high-spiritedness and blissful innocence that conveys a kind of seraphic sweetness.� They are images that tug at the heartstrings and herein lie their appeal…….�.�

….�.�The illustrations weave a captivating mélange of enthrallment, simplicity and timelessness into the pleasing tapestry of this pictorial mosaic.� There are echoes in both text and picture everywhere of a hopeful ebullience of the rebirth of this cultural and commercial urban giant.� The images unravel the story that the task of reconstruction will not be easy, but that the people do not seem dismayed.� They have already set about the rebuilding process with rarely witnessed enthusiasm.� The place is leaping back to life with an astonishing vitality…….�

Excerpts from a review of Glorious Jaffna Book by Mr. Gaston de RosayroEditor, Author and Media Consultant

Book available at all leading book stores in Sri Lanka and www.�amazon.�com


Case Story - Yathusha & Thanu Yathusha 8 years and Thanu 5 years are two vulnerable children who were identified and selected for the pilot educational sponsorship project launched under Glorious JaffnainJanuary2011.MrManohanNanayakkara,theChairmanofAsiaCapitalPLC initiated the Glorious Jaffna Charity, that is expected to cover10,000childrenintheNorthofSriLanka.

Yathusha & Thanu reside at Ward-2, Allapiddy in Velanai, which is thelargestof7inhabitedislandsofJaffnaDistrict,withthe3rdlowest density of population.� Due to continuous transportation difficulties, security restrictions and scarcity of water for livelihood, the families remain unfortunate, poor and children malnourished.�

They live in a temporary shelter supported by Sewa Lanka with access to washing water from a nearby common well.� Yathusha and Thanu have a little brother of 3 years and their parents have no regular income to manage their day-to-day expenses.� Theirfather,MrJohnsonMicheldolosthisleginalandmineafew years back during the war and hence, he is unable to carry out his traditional carpentry work that brought him a regular income.� Therefore, he had to look out for other avenues of employment and finally made a choice of catching sea leeches which was seasonable and thus did not provide him with a regular income.�

Now,YathushaandThanuarebothreceivingamonthlysupportworth Rs.�2,500/00 each to cover their educational needs.� This is provided to them through Glorious Jaffna’s implementing partneroftheproject,M/s.Caritas,Jaffna.Thishasbeenaturning point for Yathusha especially because she is very intelligent and anxious to learn, while Thanu is still attending the pre-school.� Her class report and field staff reports indicated an impressive improvement of ranking from 22 to 12 within the last three months.� Meanwhile, the burden on her mother has reduced to a large extent where the father’s income is now utilized fully to cover the other household expenditure.� Hence, they are a happy family managing their affairs on their own.�

Yathusha’s and Thanu’s sponsorship package includes stationery, educational work books, extra classes, etc based on the requests received from their class teacher amounting to Rs.�2,000.�00.� A compulsory savings of Rs.�500.�00 per month is depositedtotheirminor’ssavingsaccountopenedwithNSBJaffnafortheirfuturestability.

Yathusha is studying at Allapiddy Parasakthy Vidayalam, identified as one of the biggest schools in the area that has almost all the basic facilities.� However, the school lacks a play ground and play materials as well as teachers to cover all subjects offered



The uniqueness of this project is the regular meetings held directly with donor and the family of Yathusha and Thanu even though funding is carried out through Glorious Jaffna.� The project believes that the understanding developed and relationship created will bring harmony among communities in the long run and uplift the standards of the children and their families.�

There has been good progress made by Yathusha since the educational sponsorship was given to her.� She has shown more keenness, attending school regularly during the last few months.� She spends more time studying, especially in the morning, and also makes sure to attend tuition classes in the evenings between 3.�30 and 6 to improve further in her studies.� She has improved in English and Tamil in the recently concluded exams.� She is currently getting tuition for Mathematics,Tamil,English and Social Studies.� Overall there are many positive signs shown by Yathusha towards her education since the sponsorship grant was given to her inJanuary.YathushaisdeeplythankfultoGlorious Jaffna for the opportunity given to her to carry out her studies without worrying about the financial constraints the family was faced with before.�

Case Story - Selvanayagam VithushanVithushan, born on September 2, 1999 is a 12 year old child studying in grade 6 at Anaikkoddai Balasubramaniam Maha Vithyalayam.�

During the final stages of the armed conflict in the Vanni, Vithushan lost all his immediate family members namely, his father, mother, brother and two sisters at Mathalan on March 3, 2009.�

The Glorious Jaffna charity aims to help war affected children, to uplift their educational standards.� Selvanayagam Vithusan was one such child who was absorbed to the Educational Sponsorship Programme.� Since August Vithushan’s educational needs were provided by Asia Capital PLC under the educational sponsorship programme.�

Fortunately for Vithushan, his mother’s sister, Theresa (his present guardian) brought him to the Arunachalam Welfare Centre in Vavuniya where they lived until October 2009.� Since TheresaownedlandinAnaikkoddai,Jaffna,theywerereleasedfrom the camp for resettlement, so they were able to build a temporary shelter and live there, till they received a permanent house from the Government with World Bank funding via the normal process.�

Today, Vithushan has a beautiful house to live in which his aunt has built with the funds she received from the World Bank.�


In March 2011, when we first visited Vithushan, he did not show any interest in studies and did not attend school regularly due to poverty, as his guardian Theresa was struggling to meet the demands of the household with the earnings from a small grocery shop that she operated.� At the time, all that Vithushan had in his mind was to become a mason like his father.�

In August 2011, Vithushan started receiving his educational study pack and we observed that his school attendance was improving day by day.� He joined evening classes and was occupied with his studies throughout the day.�

Vithushan’s overall rating had dropped at the 2nd term exams but he is confident that he will perform better in the next term tests.� He shows more interest in studies now and making a great effort to show improved averages and ranking in class at the last term exams.�

We observed that Vithushan was fully engaged with his studies, working hard with an objective to obtain better results in the next term tests.�

Even though he was not sure of what he wanted to do later in life, his original intention of working as a mason has faded in his mind.�

He is much naughtier than before and has requested a bicycle to facilitate his studies.� Vithushan wants to be more independent and responsible and he believes that focusing on

education will help him out of the present situation that he and Theresa are in.�

Glorious Jaffna will continue to provide assistance to innocent war affected children like Vithushan so that they will have a better future for their lives.� By providing the necessary educational resources to children they will be on an equal footing with other children in the country and the relationship between the donor and child will broaden each child’s perspectiveonpeopleoutsideoftheNorthernProvince,whichwill ultimately minimize the possibility of communal violence in the future.�

Please visit www.gloriousjaffna.com for more information and how you can be a part of this noble cause. Please help a deserving child by ‘putting a bit of of Jaffna into your life’.

Put a bit of Jaffna into your life by empowering a child



Milk for School KidsThe Group’s second CSR initiative aims to provide much needed nourishment to children through the funding of a milk-feeding programmeconductedat9schoolsintheJaffnaPeninsula.TheimplementingagencyfortheprojectisanInternationalNonGovernmental Agency called the Humpty Dumpty Institute (HDI).� HDI implements a dairy development project in Sri Lanka fundedbytheU.S.DepartmentofAgriculture(USDA)FoodforProgressprogram.Thisproject,locatedintheJaffnapeninsulaaims towards dairy and livestock systems revitalization for communities.� Through its own project HDI sources the required milk through dairies in the area.� Through cooperatives the milk is collected and then distributed to the schools after the addition of other supplements such as Milo.�

Given the extent of the poverty levels in the areas concerned, the provision of a glass of milk is a vital addition to the nutritional intake of the children in these schools.� Most often the milk serves as the key form of nutrition for most children.�

Flood ReliefThe Eastern province was severely affected due to floods at the beginning of this year.� Kinnya in the Trincomalee district was one such town that was affected very badly.� The staff at Asia Group provided relief in terms of dry rations to about 100 residents in Kinniya during this time.�


Corporate GovernanceA Quantum Leap

The Company is committed to enhancing shareholder value through a sustainable business by maintaining and conscientiously applying high standards of corporate governance throughout the Group.� The Company has endeavoured to abide by the best practices in corporate governance; and conduct operations in a legal and ethical manner displaying professionalism, accountability and transparency.� The Company’s corporate governance model has been built and enhanced based on the following requirements and guidelines:

1. TheCompaniesAct,No.07of2007

2.� The Listing rules of the Colombo Stock Exchange

3.� “Code of Best Practice on Corporate Governance” issued by the Institute of Chartered Accountants of Sri Lanka (ICASL)

4. SecuritiesandExchangecommissionofSriLankaRules–2001

5. FinancialTransactionReportingAct,No.6of2006

6. PreventionofMoneyLaunderingAct,No.5of2006

7. ConventionontheSuppressionofTerroristFinancingAct,No.25of2005

Our best practices on Corporate Governance are as follows:

Corporate Governance Principle

Compliant Status

Level of Compliance

The Board of Directors (The Board)

Compliant The Board of Directors currently consists of eight members including the Chairman and Deputy Chairman

The day to day monitoring of operations of the organization has been delegated to the CEO and the Executive committee governed by policies, procedures and authority by the Board of Directors

The Board is accountable to the stakeholders of the Company to ensure that the business is conducted in an appropriate manner based on approved business plan and the financial and non-financial targets of the Company are achieved.� The Board’s Terms of Reference stipulate the specific duties of the Board and the following are some key matters which come under the Board’s review and approval:

I.� Company strategy and business plan

II.� Financial reporting and internal controls

III.� Financial performance

IV.� Dividend policy

V.� Changes to capital structure

VI.� Constitution and performance of the Board Committees

VII.� Regulatory compliance



Compliant Status

Level of Compliance

Board meetings Compliant The board meetings were held three (3) times during a year to review financial performance and consider other matters such as strategic and operational plans

Board appointments Compliant The Company ensures that professional qualifications, business experience and personal qualities are taken into consideration in new appointments to the Board

Board responsibilities Compliant The Board is collectively responsible for formulation, implementation and monitoring of business strategies.� In order to do so, the Board appoints sub committees of the main board to assist the main board in fulfilling its stewardship function by reviewing systems of internal control, internal and external audit, risk management, IT system and financial reporting to shareholders

Chairman Compliant The Chairman is responsible for the leadership of the Board, managing Board Meetings and the business undertaken thereat.� The Chairman, together with the Company Secretary is responsible to ensure all relevant issues are on the Board Agenda and Directors receive all appropriate information and documentation in a timely manner, thus facilitating the Directors to contribute at the deliberations

Chief Executive Officer (CEO) Compliant The CEO is responsible for the management of the Company in accordance with the mandate defined by the Board and he is accountable for the achievement of the financial and non-financial objectives as stipulated in the Company plan

IndependentNon-ExecutiveDirectors

Compliant Each non-executive director submits a signed and dated declaration annually of his independence or non-independence against a specified criteria as set out in Appendix 7A of Colombo Stock Exchange listing rule section 7.�10.�2(b)

Provision of relevant, quality and timely information

Compliant Board papers, agenda and previous board minutes to be tabled one week prior to board meeting

Dedication of adequate time and effort to matters of the Board and the company

Compliant The board members dedicate adequate time for the affairs of the company by attending Board meetings, Board sub-committee meetings and by making decisions via circular resolutions

Independent Professional Advice

Compliant The Board members are permitted to obtain independent professional advice from third parties as deemed necessary which includes the Company’s external lawyers and auditors at the expense of the Company

Balanceoftheboard–executiveand non-executive Directors

Compliant Three of the eight directors on the Board hold office in a non-executive capacity

Disclosure of new Directors details

Compliant Newdirectors’detailsaredisclosedtotherelevantauthoritiesatthetimeofappointment.�

The existing as well as new directors to the Board are disclosed in the Directors’ Report on pages 81 and 82 of this Annual Report



Compliant Status

Level of Compliance

Re-election of Directors at regular intervals

Compliant To comply with the Article of Association, the directors who have been appointed to the Board during the year, hold office until the next AGM, and are required to retire and new director to be re-elected by the shareholders

Company Secretary Compliant The Company Secretary possesses the required qualifications and expertise, and advises the Board on matters concerning the Companies Act and other relevant rules, regulations and regulatory guidelines.� All governance activities are coordinated on behalf of the Board by the Company Secretary, who is accountable to the Board

Transactions with Directors Compliant AsperthedisclosurerequirementofCompaniesAct,No.7of2007(Section192), the Board has to disclose all transactions that they have with the company

Relations with Shareholders Compliant The Board keeps informed of the developments of the company to its shareholders via stock exchange, press release and dialogue with shareholders via AGM

Annual General Meeting (AGM) Compliant The Board uses the AGM to communicate with shareholders and encourage their participation

NoticeforcallingAGM Compliant Aspersection167ofCompaniesAct,No.7of2007,annualreport,noticeof meeting, proxy form and other related documents are circulated to shareholders at least 15 working days prior to the date of the AGM

Statutory and Regulatory Reporting

Compliant The interim financial statements and Annual Report are published according to Sri Lanka Accounting Standards (SLAS) and circulated to shareholders and Colombo Stock Exchange within the stipulated time period

All the price sensitive information is disseminated to Colombo Stock Exchange on time in accordance with Section 8 of the Colombo Stock Exchange listing rules.�

All the statutory reporting to Registrar of Companies is compiled as per the provisionsofCompaniesAct,No.7of2007

Directors’ Report Compliant The Directors’ Report is set out on page 80 of this Annual Report

Directors’ responsibilities to Financial Reporting

Compliant The statement of Directors’ responsibility to financial reporting is set out on page 85 of this Annual report

Auditors’ Report Compliant The Board maintains formal, transparent and appropriate relationship with auditors of the company.� The Statement of Auditors’ Report is set out on page 92 of this Annual Report

CEO & CFO’s responsibilities to Financial Reporting

Compliant The statements of CEO & CFO’s responsibilities to financial reporting are set out on page 87 of this Annual Report

Management discussion Compliant The Management discussion of financial performance is set out on pages 28 to 47 of this Annual Report




Compliant Status

Level of Compliance

Disclosure requirements Compliant The Company complies with disclosure requirements relating to Sri Lanka Accounting Standards, Colombo Stock Exchange, Companies Act and Financial Transaction Reporting Act

Serious loss of Capital Compliant Aspersection220oftheCompaniesAct,No7of2007,ifthenetassetsoftheCompany are less than half of its stated capital, the Board shall call for an EGM (Such a situation has not arisen)

Declaration of going concern by Directors

Compliant The information is set out in the Directors’ Report on page 81 of this Annual Report

Remuneration Committee Compliant Remuneration Committee comprises of two independent non-executive directors.MrR.JWickramasingheistheChairmanoftheCommittee.The details of the Remuneration Committee’s composition, policies and responsibilities are set out on page 81 of this Annual Report

Disclosure of remuneration Compliant The total remuneration of Directors including their fees is disclosed in the note 8 on page 113 of this Annual Report

Audit Committee Compliant Audit Committee comprises of two independent non-executive directors.� MrF.X.R.PereiraistheChairmanoftheCommittee.ThedetailsoftheAuditCommittee’s composition and functions are set out on page 88 of this Annual Report

Audit Committee report Compliant The Report of Audit Committee is set out on page 88 of this Annual Report

Board review of effectiveness of the internal control

Compliant The Audit Committee regularly monitors the effectiveness of internal controls and the Board is collectively responsible for sound establishment of internal controls.� Assurance of this is achieved via meetings between the internal audit and management representatives with the Audit Committee.�

Risk Management Compliant The Company has designed a risk management system to identify, assess and manage its existing and potential risks (Risk Management of the company is set out on pages 76 to 79 of this Annual Report)

Internal control and risk assessment

Compliant PricewaterhouseCoopers has been appointed as internal auditors of the company.�

• Reviewingtheinternalauditbudget,staffingandauditplan

• Reviewingthematerialfindingsofinternalauditreviewsandmanagement’s response

• Reviewingtheeffectivenessofinternalcontrols,includingITcontrolsandsecurity, overall control environment and accounting and financial controls

• Obtaininginternalauditorsrecommendationsregardinginternalcontrolsand accounting procedure

• Reviewinginternalauditorsappointment,performanceandreplacement

• Reviewingmajorfinancialexposuresandtheprocessestomonitor,controland reporting such exposures



Compliant Status

Level of Compliance

External audit and Audit Committee

Compliant The Audit Committee contributes to the assessment of the independence and performance of external auditors by:

• Reviewingthescope,plan,andauditprocedures

• Assessingtheannualandinterimfinancialaudits

• Reviewinganymaterialdifferencesordisputeswithmanagementencountered during the course of the audit

• Reviewingthemanagementletterscontentandappropriatenessofmanagement responses

• RecommendingtotheBoardthetermsofengagementandremunerationof external auditors

• Ensuringtheobjectivityandindependenceofexternalauditors

• Carryingoutanindependentevaluationofexternalauditors’performance

Executive Committee Compliant The Executive Committee is accountable to the Board and is responsible to assess the operational and strategic performance, and be the main decision making body for the operations of the company, make appropriate recommendations to the Board

IT Governance Compliant Effectiveness of internal controls and IT security policy of the Company are regularly monitored by Audit Committee.� IT risk is considered as a critical risk in the risk profile of the company and more resources are allocated to mitigate the IT risk via a business continuity plan

Performance Governance Compliant The Company’s performance governance has a framework to monitor the performance on a monthly basis by the Board on key areas such as financial and non-financial areas including capital adequacy, solvency and liquidity

ComplianceGovernance–regulatory

Compliant The Company demonstrates its full commitment and support to high standards of compliance with the Anti-Money Laundering/Counter Financing of Terrorism (AML/CFT) requirements as per the relevant statutory enactments andrequirementsofFinancialIntelligentUnitoftheCentralBankofSriLanka.� The enterprise-wide AML/CFT programme establishes robust and comprehensive policy, procedures, processes and systems for the prevention and detection of money laundering and terrorist financing activities



Compliance status of Section 7 of the Listing rules of Colombo Stock Exchange

Rule No.

Subject Requirement Compliance Status

Details

7.�10.�1(a) Non-executivedirectors

Two or one third of total number of directors, whichever is higher, shall be non-executive directors

Compliant The Board comprises of three non-executive directors

7.�10.�2(a) Independent non-executive directors

Two or one third of non-executive directors, whichever is higher, shall be independent

Compliant The Board comprises of three independent non-executive directors

7.�10.�2(b) Submission of declaration by non-executive directors

Each non-executive directors shall submit a declaration of independence/non-independence in the prescribed format

Compliant Each non-executive directors has submitted his/her declaration to CSE

7.�10.�3(a) Disclosure relating to directors

The names of all independent directors shall be disclosed in the Annual Report

Compliant Please refer to pages 12 to 15 of the Annual Report

7.�10.�3(b) Disclosure relating to directors

In the event a director does not qualify as “independent” as per the rules of corporate governance but if the Board is of the opinion that the director is nevertheless independent, it shall specify the basis of the determination in the Annual Report

Compliant Nosuchdeterminationhasbeencarried out by the Board

7.�10.�3(c) Disclosure relating to directors

A brief resume of each director which includes information on the nature of his/her expertise in relevant functional areas is to be published in the Annual Report

Compliant Please refer to pages 12 to 15 of the Annual Report

7.�10.�3(d) Disclosure relating to directors

Uponappointmentofanewdirectortoitsboard, the Company shall forthwith provide to the CSE a brief resume of such director

Compliant The Company has 2 new appointments to the Board during the financial year under review.� A brief resume of each such appointed director has been provided to the CSE as specified

7.�10.�5 Remuneration Committee

A listed company shall have a Remuneration Committee

Compliant Please refer to page 86 of the Annual Report

7.�10.�5(a) Remuneration Committee–members

The Remuneration Committee shall comprise of a minimum of two independent non-executive directors or a majority of independent non-executive directors, whichever is higher

Compliant The Remuneration Committee comprises of two independent non-executive directors

7.�10.�5(b) Remuneration Committee–Functions

The Remuneration Committee shall recommend to the Board remuneration payable to Executive Directors and CEO

Compliant Please refer to page 86 of the Annual Report


Rule No.


Details

7.�10.�5(c) Disclosure in the Annual Report

The Annual Report should set out:

NamesofthedirectorsoftheRemunerationCommittee

The statement of remuneration policy

Aggregate remuneration paid to executive and non-executive directors

Compliant Please refer to page 86 of this Annual Report

Please refer to page 86 of this Annual Report

Please refer to page 113 of this Annual Report

7.�10.�6 Audit Committee A listed company shall have an Audit committee

Compliant Please refer the Audit Committee Report on page 88 of this Annual Report

7.�10.�6(a) Composition of Audit Committee

The Audit Committee shall comprise of a minimum of two independent non-executive directors or a majority of independent non-executive directors, whichever is higher

One of the non-executive directors shall be appointed as the Chairman of the committee by the board of directors

The CEO and CFO shall attend the Audit Committee meetings

The Chairman or one member of the Audit Committee should be a member of a recognized professional accounting body

Compliant The Audit Committee comprises of two independent non-executive directors

MrF.X.RPereira(independentnon-executive director) acts as the Chairman of the Committee

The CEO and CFO attend meetings by invitation

The Chairman is a fellow member of the Chartered Institute of Management Accountants

7.�10.�6(b) Functions of Audit Committee

The Audit Committee shall oversee:• Preparation,presentationanddisclosureof

the financial statements and ensuring they are in line with the Sri Lanka Accounting Standards

• Compliancewithfinancialreporting,Companies Act and other financial reporting regulations and requirements

• Processestoensurethatinternalcontrolsand risk management are adequate to meet the requirements of Sri Lanka Accounting Standards

• Assessmentoftheindependenceandperformance of external auditors

• Appointment,re-appointmentandremoval of external auditors and approve the terms of remuneration and terms of engagement

Compliant Please refer to the Audit Committee Report on page 88 of this Annual Report



Rule No.


Details

7.�10.�6(c) Disclosure in the Annual Report

The Annual Report shall disclose:

• NamesofthedirectorsoftheAuditCommittee

• Thedeterminationoftheindependenceof the auditors and the basis for such determination in the annual report

• AreportbytheAuditCommitteesettingout the manner of compliance with the listing rule 7.�10 on Corporate Governance

Compliant Please refer to the Audit Committee Report on page 88 of this Annual Report


Risk ManagementA Quantum Leap

Risk ManagementRisk management is a method ensuring that the business risks taken by the organization are calculated and are based on best management principals.� This enables the company to safeguard its assets and financials from risks arising from internal and external sources.� At Asia Capital PLC a sound risk management system is in place to mitigate the risks faced by the company and to achieve its objectives.� The risks faced by the company are managed according to the company’s risk appetite and to determine the best combination of risk and return which will maximize the company’s wealth while ensuring the company’s growth and existence.�

Asia Capital PLC’s internal control system ensures the objectives of the company are achieved while frauds, errors and malpractices are eliminated to reduce the internal risks faced by the company.� Therefore, the Company is focused on the significant risks which are identified by the Risk Management Process at Asia Capital PLC.�

Risk Management CommitteeAsia Capital PLC has appointed a Risk Management Committee in a bid to identify the risks faced by the Company.� The Committee consists of members of the Board, Heads of Departments and senior staff to represent many departments at Asia Capital.� The main role of the Committee is to identify the risks faced by Asia Capital PLC based on various criteria set out in the Risk Policy Manual, review the risk profile of the Company, assess the risk appetite towards specific risks or risk management practices and design control measures and implement them to achieve Company’s short term and long term objectives.�

Risk Management System at Asia Capital PLCThe risk management system is developed by the Company to address the risks associated with the constantly changing business environment and to treat relevant risks to mitigate the impact they have on Asia Capital PLC.� The risk management system identifies internal and external risks faced by the company, analyses priorities the risks, taken necessary actions to mitigate the risks and monitors the risks faced by the company periodically.� The system ensures that all the risks are captured and necessary actions are taken to manage the risks with the view of achieving company’s short and long term objectives.�

Risk IdentificationAs an Investment company, Asia Capital PLC faces numerous risks on a daily basis.� These risks arise internally as well as externally and Asia Capital needs to manage them to safeguard stakeholder wealth and the interests of the company.�

The Risk Policy Manual consists of policies for all the staff at Asia Capital to follow in order to prevent risks on a daily basis methods of identifying the internal and external risks faced by the company.� The Risk Policy Manual is revised annually to incorporate any new Risk assessment criteria and to remove invalid/out dated assessment criteria’s so that the Risk Policy Manual is up-to-date to cater to the continuously changing business environment.�

The Risk Management Committee periodically/quarterly meets to identifies the risks faced by the company and analyzes the risks based on the assessment criteria set out previously.� The identification process is a lengthy one where brainstorming sessions, surveys, questionnaires, team meetings and other reliable techniques are sourced to identify the internal critical risks of the company while in-depth market analysis, competitor analyses and technology and customer studies are carried out to identify the risks which are external to Asia Capital.� These techniques reveal the risks that Asia Capital is exposed to and provide the committee with a starting point to address them.�

Risk Identification

Risk Managment Process

Risk Analysis

Risk Planning

Risk Monitoring


Risks faced by ACAP

Strategy and planning risk

Inability to implement selected strategies or plans, not achieving business objectives, inappropriate or adverse decision making, lack of responsiveness to industry changes, improper timing to enter into and exit from capital ventures, failure to select optimum risk and return through business strategies affects Asia Capital and these are considered as strategy and planning risks.�

Competition Risk

Asia Capital faces internal and external competition risks.� Over reliance on existing products, failure to adopt new technology, inability to introduce new products and deviate from the market trends are considered as internal competition risks.� Introduction of new products by competitors and adverse promotional campaigns are some of external competition risks faced by Asia Capital.�

Liquidity Risk

Unavailabilityofcashtorunthebusinessonadailybasisorsecure a viable business opportunity, and the inability to meet regulatory cash reserves are two of the examples which are considered under Liquidity risk.� Liquidity risk is considered as high importance to the firm and Asia Capital always takes measures to manage the liquidity risk faced by the firm.�

Market Risk

Adverse financial impact on the company from the fluctuation of interest rates, foreign currency, equity and commodity prices and property values are considered as market risk.�

Credit Risk

Defaulting obligations fully or partly by Asia Capital counterparties is considered a credit risk.�

IT Risk

Current environments in the business world mainly depend on the Information Technology and Communication systems.� System failures, system errors and breakdowns, unauthorized system access, improper use of information, unavailability of IT systems and support are considered IT risk by Asia Capital.�

Social and Political Risk

Asia Capital faces social and political risk due to political instability and social unrest which affect us when carrying on our day to day business activities.�

HR Risk

Improper recruitment procedures, failure to provide compensation and benefits to the right employee, occupational health and safety issues, unethical employee conduct and high employee turnover are considered HR risks by Asia Capital.�

Fraud Risk

Malpractices, money laundering, fraudulent actions and mismanagement of assets are considered fraud risk by Asia Capital.�

Reputation Risk

Actions of the company which affect the trustworthiness of business, loss of reputation and verdicts given by a court are considered Reputational risk.�

CSR Risk

Failure to identify responsibility to society, environmentally and socially harmful business operations, and neglecting responsibility towards stakeholders of Asia Capital are considered CSR risks.�

Risk AnalysisThe risks identified by the Risk Management Committee are analyzed based on the Risk Assessment Matrix to prioritize and quantify the risks.� The Matrix takes into consideration the Impact of each risk identified and the likelihood of the risk occurring.� The risks with high impact and high likelihood of occurring would be given priority.� The risk analysis provides Asia Capital with a clear view of the risks faced by the company and enables the Board of Directors and the Risk Management Committee to formulate the necessary strategies to manage the risks faced by the company.�

Highimpact/Highlikelihood–TheRisksthatfallunderhighImpact and high likelihood are of critical importance and given the top priority due to the impact these risks could have on the company and high likelihood of occurrence.� These risks are managed carefully to mitigate the risk exposure of the company.�

Risk Assessment Matrix

Accept

Low

Impact

Likelihood

High

Low

ContingencyPlan

Minimize

Manage

Hig

h


Highimpact/Lowlikelihood–Riskswithhighimpacttothe company are of high importance but the likelihood of occurrence of these risks is less.� The company takes necessary action to reduce the impact of these risks and develops contingency plans to mitigate the impact if the risks do occur.�

Lowimpact/Highlikelihood–AsiaCapitalPLCisabletoabsorbthe impact of the risks which has a high likelihood of occurance with a low impact to the company.� The company takes actions to mitigate the occurance of these risks.�

Lowimpact/Lowlikelihood–Riskswithlowimpactandlowoccurence possibility are considered low risk and ranked the lowest amongst other risks faced by the company.� Asia Capital PLC takes precautionary actions to prevent these risks becoming high impact risks to the company.�

Risk PlanningThe Risk planning stage identifies the various strategies required to manage each risk category.�

Strategy and planning risk

• TheRiskManagementcommitteehasrecommendeda 5 year strategic plan which is revised annually.�

• ComprehensivebudgetingandvarianceanalysisdoneonacompanyandSBUlevel.

Competition Risk

• AtAsiaCapitalOracleBI-acomprehensivenewManagement Information system has been implemented in order to analyze data and information, to give Asia Capital PLC an edge over the competition.�

• Directcompetitoranalysisiscarriedoutonaquarterlybasisand Key Performance Indicators are analyzed and compared industry wide.�

Liquidity Risk

• Constantreviewofworkingcapital

• PropermanagementoffundingforAsiaSecurities

• Continuousmanagementbetweenmismatchofdebtorsand creditors.�

Market Risk

• Theriskmanagementcommitteehasrecommendedtheresearch division to monitor economic indicators and report to the strategic planning committee and also recommend strategies to deal with any possible adverse impact.�

Credit Risk

• Properagreementswrittenandsignedwiththecreditorsinorder to minimize risk of nonpayment.�

• EnsureproperSecurity/Collateral/backgroundcheckwhengranting loans to third parties.�

• Havingstrongrelationshipswithcreditors.

• Meetingsareheldregularlytomanagecounterpartyexposure and eliminate excess credit exposure for individual customers.�

• Regularreviewsareconductedonthecompany’screditexposure to ensure that the limits are within the viable limits of the company.�

IT Risk

• AcomprehensiveITgroupwidepolicyandproceduremanual has been developed which outlines a clear frame work for information risk.�

• AsiaSecuritieshasappointedanITsecurity,riskandinfrastructure manager to overlook the risk management function for the IT division.�

• Currentlymanagementisintheprocessofinvestinginadisaster recovery and high availability solution with SLT IDC.� The purchase order for phase 1 implementation has already been placed.� Space has been allocated in SLT IDC to implement a high availability solution with an initial investment of Rs.� 5 mn.� Funds have been allocated for Phase 2 with an initial budget of Rs.� 14 mn.�

HR Risk

• Motivationalprogrammesareorganizedfornewandexisting staff.�

• Periodiccomprehensiveperformancereviewsare carried out.�

Risk ManagementA Quantum Leap


• Acomprehensiveorientationprogrammeisprovidedtoallnew recruits and an ongoing training program is conducted regularly for existing employees.�

• Employeesareprovidedwithsafeworkenvironmentstocarry out their duties properly with safety checks conducted on a regular basis.�

• AvailabilityofdetailedHRmanuals,whichhelpallemployeesto adhere to rules and procedures.�

• AsiaCapitalhasprovideditsemployeeswithclearjobdescriptions where each employee is aware of their job roles and duties.� This has enabled Asia Capital to carry out a smooth HR function with less employee disputes.�

Reputation Risk

• PRcampaignsareorganizedinordertoenhancethe brand image.�

Risk MonitoringThe risk management committee needs to ensure the risk management system is reviewed periodically.� Further, proper controls need to be implemented with regard to all the strategic initiatives undertaken, in order to manage risk.� Consistent monitoring will ensure efficiency in the risk management system and thereby enable us to achieve the set objectives in the risk management process.�


Annual Report of the Board of Directors on the Affairs of the Company

The Directors of Asia Capital PLC have pleasure in submitting their Report together with the audited Financial Statements of the Company and the audited Consolidated Financial Statements of the Group for the year ended 31st March 2011.�

Principal ActivitiesDuring the year the principal activities of the Group were stock brokering, corporate finance, asset management, margin trading, treasury management, dealing and investing in securities, financial services and insurance.�

The Company acts as an investment holding company and in investment banking activities.�

Review of OperationsThe Chairman’s Review on pages 4 to 11 which forms an integral part of this report provides an overall assessment of the financial performance and financial position of the Company and describes in detail its affairs and important events for the year.� A detailed analysis of the operations and financial results

is contained in the Management Discussion and Analysis on pages 28 to 47 in this report.�

Financial StatementsThe Directors are of the view that the Income Statement, Balance Sheet, Statement of Changes in Equity, Cash Flow Statement,SignificantAccountingPoliciesandNotestheretoappearing on pages 93 to 145 have been prepared in conformity with the Sri Lanka Accounting Standards and the requirementsoftheCompaniesActNo.07of2007andtheListing Rules of the Colombo Stock Exchange.�

Auditor’s ReportThe Auditor’s Report on the Financial Statements is given in page 92.�

Accounting PoliciesThe accounting policies adopted in the preparation of Financial Statements are given in pages 100 to 111.�

Financial Results

For the year ended 31st March

Group Company2011

Rs. 0002010

Rs. 000Re-stated

2011Rs. 000

2010Rs. 000

Re-stated

Profit before tax expense 1,331,927 298,994 479,354 183,470

Income tax expense (180,912) (66,435) (14,125) (12,672)

Profit after tax expense 1,151,015 232,559 465,229 170,797

Minority Interest 162,997 12,600 - -

Profit attributable to Shareholders 988,018 219,959 465,229 170,797

(Accumulated Losses) at the beginning of the year (856,779) (1,076,291) (834,326) (1,005,123)

Dividend Payment - - - -

Adjustments (88,496) (466) - -

Retained Earnings/(Accumulated Losses) at the end of the Year

42,744

(856,779)

(369,095)

(834,326)

A Quantum Leap


DividendsThe directors do not recommend a dividend for the year under review.�

Property, Plant and EquipmentAn analysis of the Property, Plant and Equipment of the Group andtheCompanyisdisclosedinNote11oftheFinancialStatements on pages 115 to 118.�

Stated CapitalThe Stated Capital of the Company as at 31st March 2011 was Rs.� 1,114,558,000/- (110,000,000 Shares)

DonationsThere were no donations made by the Company during the year.�

Capital CommitmentsThere were no material capital expenditure commitments other thanthosedisclosedinNote38onpage144oftheFinancialStatements.�

ProvisionsThe basis adopted for provisioning is disclosed in Accounting PolicyNo3.3.1onpage106oftheFinancialStatements.

Provision for the TaxationThe provision for taxation is computed at the rates as disclosed inNote9onpage113oftheFinancialStatements.

Statutory PaymentsThe Directors, to the best of their knowledge and belief, are satisfied that all statutory dues have been paid up to date, or have been provided for in the Financial Statements.�

Contingent LiabilitiesDetails of contingent liabilities and capital commitments as at 31stMarch2011aresetoutinNote38andonpage144oftheFinancial Statements.�

Post Balance Sheet EventsIn the opinion of the Directors, no item, transaction or any other material event of un unusual nature has arisen during the

period between the end of the financial year and the date of thisreport,otherthanthosedisclosedinNote39onpage144of the Financial Statements.�

Risk Management and Internal ControlThe Board confirms that there is an ongoing process for identifying, evaluating and managing any significant risk faced by the Company.� The Directors review this process through the Audit Committee.�

Going ConcernThe Board of Directors is satisfied that the Company has adequate resources to continue its operation in the foreseeable future.� Accordingly, the Financial Statements are prepared based on the going concern concept.�

Directors who held office during the YearThe Directors of the Company during the year were as follows.�

Mr.HLLMNanayakkara

Mr.JHPRatnayeke

Mr.� A C Seneviratne (resigned with effect from 1st September, 2010)

Mr.FXRPereira

Mr.� A D Ross

Mr.ValentineSivaJr. (appointed with effect from 24th January, 2011)

Mr.� D Muthukumarana (appointed with effect from 23rd March, 2011)

Ms.DPPieris[AlternateDirectortoMr.HLLMNanayakkara](appointed with effect from 3rd December, 2010)

Appointments during the yearMs.DPPieris[AlternateDirectortoMr.HLLMNanayakkara]was appointed with effect from 3rd December, 2010.�

Mr.ValentineSivaJr.wasappointedwitheffectfrom24thJanuary,2011.

Mr.� D Muthukumarana was appointed with effect from 23rd March, 2011.�

Resignations during the yearMr.� A C Seneviratne resigned with effect from 1st September, 2010.�



Appointments after the conclusion of the year Mr.RJWickramasinghewasappointedwitheffectfrom3rd May 2011.�

Mr.SAAbeyesinhe[AlternateDirectortoMr.ValentineSivaJr.]wasappointedwitheffectfrom6thJune,2011.

Mr.SAAbeyesinhe[AlternateDirectortoMr.JHPRatnayeke]was appointed with effect from 29th August, 2011.�

Mr.� S A Abeyesinhe was appointed with effect from 18th November,2011

Directors who held office as at the end of the Accounting periodMr.HLLMNanayakkara

Mr.JHPRatnayeke

Mr.FXRPereira

Mr.� A D Ross

Mr.ValentineSivaJr.

Mr.� D Muthukumarana

Ms.DPPieris(AlternateDirectortoMr.HLLMNanayakkara)

Ofthe6Directors,Mr.FXRPereiraandMr.ADRossarenon-executive, independent Directors.�

Directors Retiring (at the Annual General Meeting)(1) Mr.JHPRatnayekeretiresbyrotationinaccordancewith

Article 98 of the Articles of Association of the Company and being eligible, offers himself for re-election.�

(2) Mr.RJWickramasingheretiresinaccordancewithArticle103 of the Articles of Association of the Company and being eligible, offers himself for re-election.�

(3) Mr.� D Muthukumarana who is presently 71 years of age will cease to hold office at the conclusion of the Annual General Meeting and it is proposed to move a resolution for his re-appointment for a further period of one year or upto the date of the next Annual General Meeting (whichever occurs first) and for the non-application of the age limit referred to in Section 210 of the Companies ActNo.7of2007.

Corporate GovernanceThe Board of Directors confirm that the Company is compliant with section 7.�10 of the Listing Rules of the Colombo Stock Exchange.�

An Audit Committee and a Remuneration Committee function as Board sub committees with Directors who possess the requisite qualifications and experience.� The composition of the said committees is as follows;

Audit CommitteeMr.FXRPereira(IndependentNon-ExecutiveDirector)

Mr.ADRoss(IndependentNon-ExecutiveDirector)


The Report of the Audit Committee is given on page 88 which forms part of the Annual Report.�

Remuneration CommitteeMr.RJWickramasinghe(IndependentNon-ExecutiveDirector)

Mr.FXRPereira(IndependentNon-ExecutiveDirector)


Mr.ValentineSivaJr.

The Report of the Remuneration Committee is given on page 86 which forms part of the Annual Report.�

Arrangement for Acquisition of Shares by DirectorsThe Company has provided an interest free loan of Rs.�17.�5 Million to the Employee Share Ownership Plan (ESOP) Trust.� NoshareswereallottedfromtheESOPduringtheyear.

Directors’ Interest RegisterIntermsoftheCompaniesActNo.07of2007anInterestRegister was maintained during the accounting period under review.� This Annual Report also contains particulars of entries made in the Interest Register.�

Directors Remuneration and Other Benefits of DirectorsDirectors remuneration and other benefits of directors are statedintheNote8onpage113oftheFinancialStatements.

A Quantum Leap


Directors’ Interest In Shares

Name

No. of Shares as at

31st March 2011

No. of Shares as at

31st March 2010

HLLMNanayakkara/Seylan Bank PLC

2,139,200 -

JHPRatnayeke 30 85,030

FXRPereira - -

A D Ross - -

Name

No. of Shares as at

31st March 2011

No. of Shares as at

31st March 2010

ValentineSivaJr. - -

D Muthukumarana 50,000 -

D P Pieris

[Alternate Director to Mr.� HLLMNanayakkara]

40,000 -

Shareholders Information The distribution and analysis of shareholdings were as follows;

As at 31st March 2011 As at 31st March 2010

No. of Shareholders

No. of Shares % No. of Shareholders

No. of Shares %

1 - 1,000 5,631 806,065 0.�73% 5,989 1,019,336 0.�93%

1,001 - 10,000 552 1,394,642 1.�27% 919 2,746,961 2.�50%

10,001 - 100,000 42 1,185,480 1.�08% 135 4,031,330 3.�66%

100,001 - 1,000,000 - - - 11 3,187,910 2.�90%

1,000,000 & over 5 106,613,813 96.�92% 3 99,014,463 90.�01%

Total 6,230 110,000,000 100.�00% 7,057 110,000,000 100.�00%


No. of Shareholders


No. of Shares %

Resident 6,161 9,498,762 8.�64% 6,980 13,798,002 12.�54%

Non-Resident 69 100,501,238 91.�36% 77 96,201,998 87.�46%

Total 6,230 110,000,000 100.�00% 7,057 110,000,000 100.�00%


No. of Shareholders


No. of Shares %

Individual 6,117 101,346,688 92.�13% 6,918 106,456,309 96.�78%

Institutional 113 8,653,312 7.�87% 139 3,543,691 3.�22%

Total 6,230 110,000,000 100.�00% 7,057 110,000,000 100.�00%



Directors’ Interest In ContractsNoneoftheDirectorshadadirectorindirectinterestinanycontracts or proposed contracts with the Company other than asdisclosedinNote37onpages139to143oftheFinancialStatements.�

Public ShareholdingThe percentage of public shareholding as at the 31st of March 2011 was 6.�41 percent.�

Annual General MeetingTheNoticeoftheAnnualGeneralMeetingwillbesentinduecourse.�

AuditorsThe Financial Statements for the year ended 31st March 2011 have been audited by Messrs.� KPMG Ford, Rhodes, Thornton & Company (Chartered Accountants) who offer themselves for reappointment.� As far as the Directors are aware, the Auditors do not have any relationship (other than that of an Auditor) with the Company other than those disclosed above.� The Auditors also do not have any interest in the Company.�

The Auditors Messrs.� KPMG Ford Rhodes Thornton & Co.�, Chartered Accountants were paid Rs.� 1,050,000/- as Audit fees by the Company.�

A resolution relating to their reappointment and authorising the Directors to determine their remuneration will be proposed at the Annual General Meeting.�

By Order of the Board

H L L M Nanayakkara J H P Ratnayeke

Chairman/Managing Director Deputy Chairman

P R Secretarial Service (Private) Limited

18thNovember2011Colombo

20 Largest Shareholders of Equity Name As at 31st March 2011 As at 31st March 2010

No. of Shares % No. of Shares %1 Mr.� Vijayeswaran S Vijayaratnam 96,381,773 87.�62% 95,698,023 86.�99%2 Fast Gain International Limited 3,875,900 3.�52% - -3AsianAllianceInsurancePLC–A/C2 2,191,500 1.�99% - -4SeylanBankLimited/Mr.HLLMNanayakkara 2,139,200 1.�94% - -5 P W Corporate Secretarial (Pvt) Ltd 2,025,440 1.�84% 2,025,440 1.�84%6 Asia Asset Finance Limited 80,000 0.�07% - -7 Mr.� M S D Galagedara 70,000 0.�06% - -8Mr.GKMBJayasinghe 67,600 0.�06% - -9 Anglo Amalgamated Pty Ltd 67,000 0.�06% 130,000 0.�11%10Ms.MMUdeshi 55,880 0.�05% - -11 Mr.� D T Fernando 51,000 0.�05% - -12 Mr.� D Muthukumarana 50,000 0.�05% - -13 Mr.� W A Fernando 44,000 0.�04% - -14 Ms.� S A Rajkothwala 42,000 0.�04% - -15 Ms.� D P Pieris 40,000 0.�04% - -16Mr.SHNMohamed 38,400 0.�03% - -17 Seylan Bank Limited/Asia Asset Finance Limited 36,400 0.�03% - -18 Mr.� K Kularatnam 34,300 0.�03% - -19Mr.DFKJayamaha 32,000 0.�03% - -20Mr.UGBulumulle 31,800 0.�03%* P W Corporate Secretarial (Pvt) Ltd is the Trustee for the Employee Share Option Plan (ESOP)

A Quantum Leap


Statement of Directors’ Responsibilities

The Board of Directors of Asia Capital PLC are responsible for ensuring that the Company maintains proper books of accounts of all transactions and prepares Financial Statements for each financial year which give a true and fair view of the state of affairs of the Company and its Subsidiaries, Associates for that period.TheCompaniesActNo.07of2007requiresthattheDirectors prepare Financial Statements for each year, giving a true and fair view and the state of affairs of the Company and the Group as at the end of the financial year and the profit and loss of the Company and the Group for that financial year.�

In the circumstances, the Directors of the Company state below their responsibilities in relation to the Financial Statements of the Company and its Subsidiaries and Associates for the year ended 31st March, 2011.� These differ from the Auditor’s responsibilities, which are set out in their report given on page 92.� The Board of Directors have a responsibility to ensure that the Company and its Subsidiary and Associates are maintaining sufficient accounting policies to ensure the accuracy and reliability of Financial Statements.� The Directors have a general responsibility to take steps to safeguard the assets of the Company.�

The Directors confirm that suitable accounting policies have been used and applied consistently except where voluntary changes have been made and that all applicable accounting standards have been followed in the preparation of the Financial Statements.� Furthermore, reasonable and prudent judgments and estimates have been made in the preparation of these Financial Statements.�

The Directors confirm that the Financial Statements have been prepared and presented in accordance with the Sri Lanka Accounting Standards and that they provide the information as requiredbytheCompaniesActNo.07of2007.

The overall responsibility for the Company’s internal control systems lies with the Directors.� Whilst recognising the fact that there is no single system of internal control that could provide absolute assurance against material misstatements and fraud, the Directors confirm that the prevalent internal control systems

instituted by them and which comprise internal checks, internal audit and financial and other controls are so designated that, there is reasonable assurance that all assets are safeguarded and transactions properly authorized and recorded, so that material misstatements and irregularities are either prevented or detected within a reasonable period of time.�

The Directors are responsible for providing the auditors with every opportunity to carry out the necessary audit work in enabling them to present their report.�

The Directors have adopted the “going concern basis” in preparing the Financial Statements.� Having reviewed the Group’s business plans, the Directors are satisfied that the Company has adequate resources to continue in operation.�

The Directors confirm that to the best of their knowledge all taxes and levies payable by the Group, all contributions, levies and taxes payable on behalf of and in respect of the employees and all other statutory obligations including retirement gratuities as were due as at the Balance Sheet date have been either duly paid or appropriately provided for in the Financial Statements.�

The Directors are of the view that they have discharged their responsibilities as set out above

Stefan AbeyesinheDirector/Acting Group Chief Executive Officer

Daya MuthukumaranaDirector

18thNovember2011


Remuneration Committee Report

The Remuneration Committee appointed by and responsible to the Board of Asia Capital PLC as at balance sheet date comprises of

1. Mr.FXRPereira(Chairman) IndependentNon-ExecutiveDirector

2.� Mr.� Valentine Siva Director

3.� Mr.� Daya Muthukumarana Non-ExecutiveDirector

Mr.R.J.WickramasinghewasappointedastheChairmanoftheRemuneration Committee after the balance sheet date.� The Chairman and CEO attend the meeting of the Remuneration Committee by invitation.�

The Remuneration Committee met as and when required in the year to March 2011.�

The purview of the Remuneration Committee is to assist the Board of Directors in setting Policies with regard to aligning commendation of staff with the skills, expertise and quality demanded of them.� This is to ensure that the company is able to attract, motivate and retain high quality management in a competitive environment and this is well placed to meet the challenges the company faces.� The Committee is responsible for ensuring that the total compensation package is competitive and can attract the best talent in the marketplace.�

The Remuneration Committee reviewed the terms of the Chairman and Director/CEO.� This exercise was carried out in a manner designed to enhance the value of stakeholders of the company.AllNon-ExecutiveDirectorsreceivefeesforserviceasDirectors and for serving on sub-committees.�

The Remuneration Committee had made a preliminary proposal of progressively moving the compensation schemes of Asia Capital PLC and Asia Securities (Pvt) Ltd towards a ‘pay for performance’ philosophy.� This is under consideration.�

The Remuneration Committee wishes to place on record their thanks and appreciation for the services rendered by Mr.JSMather.

F X R PereiraChairman - Remuneration Committee

18thNovember2011

A Quantum Leap


Chief Executive Officer’s and Chief Financial Officer’s Responsibility Statement

The Financial Statements of Asia Capital PLC and the Group, are prepared in compliance with the Sri Lanka Accounting Standards issued by the Institute of Chartered Accountants of SriLanka,therequirementsoftheCompaniesActNo.7of2007,theSriLankaAccountingandAuditingStandardsActNo.15of 1995 and the listing rules of the Colombo Stock Exchange, to the extent applicable to the Company.� We confirm that to the best of our knowledge, the Financial Statements and other financial information included in this Annual Report, fairly present in all material respects, the financial position, results of operations and cash flows of the Company and the Group as of and for the periods presented in this Annual Report.� There are no departures from the prescribed accounting standards in their adoption.� The accounting policies used in the preparation of the Financial Statements are appropriate and are consistently applied, except where otherwise stated in the NotesaccompanyingtheFinancialStatements.

The Board of Directors and the management of your Company accept responsibility for the integrity and objectivity of these Financial Statements.� The estimates and judgements relating to the Financial Statements were made on a prudent and reasonable basis, in order that the Financial Statements reflect in a true and fair manner, the form and substance of transactions and reasonably present the Company’s state of affairs.�

To ensure this, we have taken proper and sufficient care in evaluating the effectiveness of the system of internal controls and procedures of the Group and are satisfied that they have been effective as of the end of the period covered by this Annual Report.� We are also satisfied that the proper accounting records are maintained for safeguarding assets and for preventing and detecting fraud as well as other irregularities.� Our internal auditors have conducted periodic audits to provide reasonable assurance that the established policies and procedures of the Company were consistently followed.� However, there are inherent limitations that should be recognized in weighing the assurances provided by any system of internal controls and accounting.�

The Financial Statements were audited by Messrs KPMG Ford Rhodes Thornton & Co.� Chartered Accountants, the Independent Auditors.�

The Audit Committee of your Company meets periodically with the Internal Auditors and the Independent Auditors to review the manner in which these auditors are performing their responsibilities, and to discuss auditing, internal control and financial reporting issues.� To ensure complete independence, the independent auditors and the internal auditors have full and free access to the members of the audit committee to discuss any matter of substance.�

It is also declared and confirmed that the Company has complied with and ensured compliance by the auditor with the guidelines for the audit of Listed Companies where mandatory compliance is required.� It is further confirmed that all the other guidelines have been complied with and that there are no known material litigations and claims against the Company other than those arising out of the normal course of business.�

Stefan AbeyesinheDirector/Acting Group Chief Executive Officer

Thusitha PereraGroup Chief Financial Officer

18thNovember2011


Audit Committee Report

The terms of reference of the Audit Committee comply with the

listing rules of the Colombo Stock Exchange.� The Committee

comprised of three members as at Balance Sheet date:

1. Mr.FXRPereira(Chairman)

IndependentNon-ExecutiveDirector

2.� Mr.� Andrew D.� Ross

IndependentNon-ExecutiveDirector

3.� Mr.� Daya Muthukumarana

Non-ExecutiveDirector

Mr.FXRanjitPereiraisafellowmemberoftheChartered

InstituteofManagementAccountants,UnitedKingdomand

a fellow of CMA Sri Lanka.� Mr.� Andrew D.� Ross is a Chartered

Accountant of the Institute of Chartered Accountants, England

and Wales.� Mr.� Daya Muthukumatrana has a Masters in Business

AdministrationPIM(UniversityofSriJayewardenepura),

Fellowship in Banking from IBSL, Advanced Credit and

International Banking at Vereins and West Bank Hamburg and

Midland Bank London, Certificate in Project Management

CranfieldUniversity,UK,andaSeniorBankerwith25years

experience in corporate banking.� He is currently the Chairman

of Asia Asset Finance Ltd.�

The company’s management is responsible for the financial

statements and for maintaining effective internal control over

financial reporting.� The Audit Committee fulfills an oversight

function over the financial reporting.� The main purpose is to

provide assistance to the Board of Directors of Asia Capital PLC

in fulfilling their responsibility to the Shareholders and other

stakeholders.�

The Group Chief Executive Officer, Group Chief Financial Officer

and Accountants attend the meetings at the invitation of the

committee.� Discussions were held with the External Auditors.�

In addition, a special meeting with Senior Partner was held prior

to commencement of the final phase of the Audit.�

The Committee met as and when required including to review

the quarterly annual financial statements.�

The Committee reviewed the letter of engagement of the

auditors and recommended their appointment to the Board of

Directors.�

The Chairman of this Audit Committee is also the Chairman of

the Audit Committee of Asia Securities (Pvt) Ltd, a subsidiary of

Asia Capital PLC.�

PricewaterhouseCoopers were appointed Internal Auditors of

Asia Capital PLC & Asia Securities (Pvt) Ltd.� The audit programme

was agreed with them.� The audit report submitted by,

PricewaterhouseCoopers, together with Management response

have been tabled at audit committee meetings.�

The internal audit carried out by PricewaterhouseCoopers

evaluates the efficacy of internal controls, and action taken

to control and mitigate operational and business risks; whilst

keeping the compliance of Asia Capital PLC and Asia Securities

(Pvt) Ltd.�, with statutory requirements under review.�

Internal audit reports include recommendations to improve

internal control.� The overall effectiveness of outsourcing

internal audit will be reviewed by the Audit Committee.�

The audit committee wishes to acknowledge with thanks the

servicesofMr.JSMather,whoservedontheauditcommittee

previously.�

AfterthebalancesheetdateMr.RJWickramasinghewho

was appointed to the Board in May 2011 was appointed as an

auditcommitteemember.Mr.RanjithJ.Wickremasingheisa

Fellow of the Chartered Institute of Management Accountants,

London (FCMA) and the Chartered Association of Certified

Accountants, London.� (FCCA) He was former Chairman of the

Ports Authority and the Ceylon Shipping Corporation Limited.�

Mr.� Wickremasinghe has over thirty years experience in the

fields of Finance, Operations, Accounting, Corporate Planning,

Financial Analysis and Treasury Management, both locally and

internationally.�

A Quantum Leap


Financial Reporting

The committee as part of its responsibility to oversee the

Asia Capital Groups financial reporting process on behalf of

the Board of Directors has reviewed the reporting processes

including compliance with Sri Lanka Accounting Standards and

theCompaniesAct.No.7of2007.

Convergence to Sri Lanka Financial Reporting Standards (SLFRS)

and Sri Lanka Accounting Standards (SLAS- LKAS)

The committee identified the need for Asia Capital PLC and

its Subsidiaries to be compliant with Sri Lanka Financial

Reporting Standards (SLFRS) and LKAS which new standards will

comeintooperationfrom1stJanuary2012.Asapreparatory

measure Accountants of the Group have been exposed to

training conducted by ICASAL and Central Bank.�

The Audit Committee will discuss with the external auditors

M/s.� KPMG Ford Rhodes Thornton & Co.� the differences that

will arise in the accounts procedure and may commission a

GAP analysis to identify areas requiring action.� The Board of

Directors will be appraised of the implication of adopting SLFRS

and LKAS.�

F X R Pereira

Chairman - Audit Committee

18thNovember2011




A Quantum Leap

Independent Auditors’ Report

TO THE SHAREHOLDERS OF ASIA CAPITAL PLC

Report on the Financial Statements

We have audited the accompanying Financial Statements of Asia Capital PLC (the “Company”), the Consolidated Financial Statements of the Company and its Subsidiaries as at 31st March 2011 which comprise the Balance Sheet as at 31st March 2011, and the Income Statement, Statement of Changes in Equity and Cash Flow Statement for the year then ended, and other explanatory notes set out on the pages 93 to 145.�

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these Financial Statements in accordance with Sri Lanka Accounting Standards.� This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of Financial Statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.�

Scope of Audit and Basis of Opinion

Our responsibility is to express an opinion on these Financial Statements based on our audit.� We conducted our audit in accordance with Sri Lanka Auditing Standards.� Those standards require that we plan and perform the audit to obtain reasonable assurance whether the Financial Statements are free from material misstatement.�

An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the Financial Statements.� An audit also includes assessing the accounting policies used and significant estimates made by management,

as well as evaluating the overall Financial Statement presentation.�

We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.� We therefore believe that our audit provides a reasonable basis for our opinion.�

Opinion-Company

In our opinion, so far as appears from our examination, the Company maintained proper accounting records for the year ended 31st March 2011 and the Financial Statements give a true and fair view of the Company’s state of affairs as at 31st March 2011 and its profit and cash flows for the year then ended in accordance with Sri Lanka Accounting Standards.�

Opinion-Group

In our opinion, the Consolidated Financial Statements give a true and fair view of the state of affairs as at 31st March 2011 and the profit and cash flows for the year then ended, in accordance with Sri Lanka Accounting Standards, of the Company and its subsidiaries dealt with thereby, so far as concerns the shareholders of the Company.�

Report on Other Legal and Regulatory Requirements

These Financial Statements also comply with the requirements ofSections153(2)to153(7)oftheCompaniesActNo.07 of 2007.�

Chartered Accountants 18thNovember2011 Colombo


Income Statements

GROUP COMPANYFor the year ended 31st March 2011 2010 2011 2010

Note Rs.’000 Rs.’000 Rs.’000 Rs.’000 Re-stated Re-stated

Revenue 5 2,122,917 1,328,423 303,344 371,120

Cost of Sales (703,856) (677,700) (88,256) (179,351)

Gross Profit 1,419,061 650,723 215,088 191,769

Other Operating Income 6 776,370 134,947 364,698 115,568

Selling and Distribution Expenses (88,967) (49,601) (10,599) (2,095)

Administrative Expenses (782,094) (440,488) (73,853) (62,479)

Other Operating Expenses (67,468) (78,558) (27,058) (12,016)

Reversal for fall in value of Investments - 49,062 32,000 27,391

(Provision)/Reversal for Bad and Doubtful Debts (2,826) (19,454) 11,120 (19,036)

NetFinanceIncome/(Costs) 7 29,580 (46,122) (32,042) (55,633)

Share of Profit of Associate Companies 14.�2.�1 48,271 98,485 - -

Profit Before Taxation 8 1,331,927 298,994 479,354 183,469

Income Tax Expense 9 (180,912) (66,435) (14,125) (12,672)

Profit for the Year 1,151,015 232,559 465,229 170,797

Attributable to

Equity Holders of the Parent Company 988,018 219,959 - -

Minority Interest 162,997 12,600 - -

Profit for the Year 1,151,015 232,559 465,229 170,797

Basic Earnings Per Share (Rs.�) 10 8.�98 2.�00 4.�23 1.�55

Dividend Per Share (Rs.�) - - - -

Figures in bracket indicate deductions.�

The Financial Statements are to be read in conjunction with the accounting policies and related notes, which are set out on pages 100

to 145.�


A Quantum Leap

Balance Sheets

GROUP COMPANYAs at 31st March 2011 2010 2011 2010


ASSETS Non-Current Assets Property, Plant and Equipment 11 401,132 328,038 42,700 12,285 Intangible Assets 12 165,359 78,143 1,818 2,421 Investment Properties 13 69,685 67,039 - - Investments in Subsidiaries 14.�1 - - 629,475 355,401 Investments in Associates 14.�2 132,440 362,827 583,187 62,204 Other Long Term Investments 14.�3 1,271,095 9,383 - - Advance for Share Capital 15 - - - 200,000 Loans given to ESOP 16 17,491 17,491 17,491 17,491 Loans due from Related Parties 17 - - 352,514 223,703 Long Term Deposits and Advances 18 11,422 7,137 7,922 3,637 Trade and Other Receivables 22 754,343 1,332,474 - - Deferred Taxation 27 9,777 1,913 - - 2,832,744 2,204,445 1,635,107 877,142 Current Assets Inventories 19 34,935 30,834 - - Short Term Investments 20 3,607,989 998,996 1,187,665 771,298 Short Term Lendings 21 - - - - Income Tax Receivable 4,329 32,426 1,832 1,106 Trade and Other Receivables 22 1,886,260 2,087,430 307,627 8,858 Loans due from Related Parties 17 - - 31,125 10,499 Amounts due from Related Parties 23 72,845 98,264 483,720 269,702 Cash and Cash Equivalents 24 211,523 300,638 12,914 10,035 5,817,881 3,548,588 2,024,883 1,071,498 Total Assets 8,650,625 5,753,033 3,659,990 1,948,640

EQUITY AND LIABILITIES Capital and Reserves Stated Capital 25 1,114,558 1,114,558 1,114,558 1,114,558 Revaluation Reserve 27,560 8,709 - - Capital Reserves 5,774 1,790 - - General Reserve 3,000 3,000 - - Retained Earnings/(Accumulated Losses) 42,744 (856,779) (369,095) (834,326)Shareholders’ Fund 1,193,636 271,278 745,463 280,232Minority Interest 598,549 248,106 - - Total Equity 1,792,185 519,384 745,463 280,232


GROUP COMPANYAs at 31st March 2011 2010 2011 2010


Non-Current Liabilities Debentures 26 - 10 - - Retirement Benefit Obligations 28 44,376 24,081 2,736 4,926 Non-InterestBearingBorrowings 29 144,670 144,670 144,670 144,670InterestBearingBorrowings-NonCurrent 30 41,724 443,094 9,364 -Provision for Life Solvency 100,000 - - - Trade and Other Payables 32 105,686 136,923 - - 436,456 748,778 156,770 149,596 Current Liabilities Interest Bearing Borrowings - Current 30 1,241,316 1,441,897 1,539,501 863,594 Debentures 26 10 - - - Insurance Provision 31 2,190,558 - - - Trade and Other Payables 32 2,109,857 2,582,591 87,213 99,629 Amounts due to Related Parties 33 - - 444,600 232,952 Income Tax Payable 132,634 28,873 - - Bank Overdrafts 24 747,609 431,510 686,443 322,637 6,421,984 4,484,871 2,757,757 1,518,812 Total Liabilities 6,858,440 5,233,649 2,914,527 1,668,408 Total Equity and Liabilities 8,650,625 5,753,033 3,659,990 1,948,640 NetAssetsPerShare(Rs.) 10.85 2.47 6.78 2.55

Figures in brackets indicate deductions.�

The Financial Statements are to be read in conjunction with the accounting policies and related notes, which are set out on pages 100 to 145.�

The Independent Auditors’ Report is given on page 92.�

IcertifythattheabovefinancialstatementshavebeenpreparedincompliancewiththerequirementsoftheCompaniesActNo.7 of 2007.�

Thusitha Perera Group Chief Financial Officer

The Board of Directors is responsible for the preparation and presentation of these Financial Statements.�

Approved and signed for and on behalf of the Board of Directors,

H L L M Nanayakkara J H P RatnayekeChairman/Managing Director Deputy Chairman

18thNovember2011Colombo


A Quantum Leap

Cash Flow Statements



CASH FLOW FROM OPERATING ACTIVITIES Profit before Income Tax Expense 1,331,927 298,994 479,354 183,470 Adjustments for; Provision for Retiring Benefit Obligation 28 22,622 8,274 1,973 2,816 Depreciation on Property, Plant and Equipment 11 48,467 30,253 5,113 3,775 Amortisation of Intangible Assets 2,047 4,406 603 594 Depreciation on Investment Property - 262 - - (Profit)/Loss on Disposal of Property, Plant and Equipment (1,630) 4,301 (1,362) (1,395)Profit on Disposal of Subsidiary (350,772) (78,494) (138,353) (98,481)Profit on Disposal of Associates - - (161,466) -UnrealisedCapitalGain (143,415) (10,199) (20,601) (10,925)Profit on Disposal of Investment Property (7,721) (2,821) - - Provision for Insurance Claims 450,981 - - - Provision/(Reversal) for Bad and Doubtful Debts 2,826 19,454 (11,120) 19,036 Provision for fall in value of Investments - (49,062) (32,000) (27,391)Share of Profit of Associate Company’s before taxation (48,271) (98,485) - - Interest Income 7 (129,012) (32,407) (67,521) (27,904)Interest Expenses 7 99,432 78,529 99,563 83,537 Operating profit before working capital changes 1,277,481 173,005 154,183 127,132 (Increase)/decrease in Inventories (30,786) (698) - - (Increase)/decrease in Short Term Investments (1,320,323) (230,938) (395,766) (187,826)(Increase)/decrease in Trade and Other Receivables (1,630,383) (884,557) (76,451) (15,719)(Increase)/decrease in Amount due from Related Parties 25,419 (45,856) (202,910) (297,671)Increase /(decrease) in Trade and Other Payables 317,958 938,220 (12,415) 59,622 Increase/(decrease) in Amount due to Related Parties 124 - 207,665 134,126 Cash used in operations (1,360,510) (50,824) (325,694) (180,335) Claims paid (net of premium receive) (472,676) - - -Gratuity paid 28 (6,786) (4,405) (180) (2,438)Income tax paid (48,831) (44,682) (15,529) (7,370)Net cash flows used in operating activities (1,888,803) (99,911) (341,403) (190,143)




CASH FLOW FROM INVESTING ACTIVITIES Acquisition of Property, Plant & Equipment (57,842) (36,522) (21,839) (3,151)Acquisition of Intangible Assets - (4,775) - (3,015)Acquisition of Investment Properties (32,935) (67,039) - -Proceeds from Disposal of Investment Properties 34,760 14,583 - -Advance for Share Capital - - - (200,000)Acquisition of Subsidiary net of cash received 34 (545,651) (220,494) (203,280) (167,900)Increase in Interest in Subsidiaries (292,193) - - - Investments in Associates - - (586,119) - NetProceedsfromDisposalofSubsidiary 291,856 100,539 299,559 124,484LoansGrantedtoRelatedParties(Net) - - (148,748) -Proceeds from Disposal of Property, Plant & Equipment 2,156 105,393 1,362 1,451 Dividend Received from Associates 9,000 16,000 - - Subsidiary Dividend to Minority Share Holders - (20,033) - -Purchase of other Long Term Investments 86,915 - - - Proceeds from Disposal of Long Term Investments 226,603 238,089 - 190,058 Interest Received 129,012 32,407 67,521 27,904 Net cash flows from/(used in) investing activities (148,319) 158,148 (591,544) (30,169)

CASH FLOW FROM FINANCING ACTIVITIES Redemption of Debenture - (13,433) - - NetProceedsFrom/Repaymentofnon-interest bearing borrowings - Loan - 89,165 - 89,165 NetProceedsFrom/RepaymentofOtherLoans 427,274 (32,146) 4,363 (44,961)Direct Cost on Share Issue (4,688) - - -Proceed from Minority on renunciation of right of Subsidiary 812,500 - - -NetProceedsFrom/RepaymentofAmountsPayableunder Re-purchase Agreement 458,860 83,648 375,858 166,649 NetProceedsfrom/RepaymentofCommercialPapers 69,894 8,082 291,363 71,356Dividend paid (32,500) - - -Interest paid (99,432) (78,529) (99,563) (83,537)Net cash flows from/(used in) financing activities 1,631,908 56,787 572,021 198,672 Net increase/(decrease) in cash & cash equivalents (405,214) 115,024 (360,926) (21,639)Cash and cash equivalents at the beginning of the year 24 (130,872) (245,896) (312,603) (290,962)Cash and cash equivalents at the end of the year 24 (536,086) (130,872) (673,529) (312,602)




A Quantum Leap

Statements of Changes in Equity

GROUP Attributable to Equity holders of the Company Note Stated Revaluation Capital General Retained Total Minority Total Capital Reserve Reserve Reserve Earnings/ Interest Equity Accumulated Losses Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000

Balance as at 1st April 2009 as previously stated 1,114,558 10,437 1,344 3,000 (1,080,850) 48,489 194,959 243,447 Prior year adjustment on Effect of Changes in Accounting Policies 36.�1 - - - - 4,559 4,559 - 4,559 Balance as at 1st April 2009 (Re-stated) 1,114,558 10,437 1,344 3,000 (1,076,291) 53,048 194,959 248,006 Adjustment on Acquisition and Disposal of Subsidiary - - - - - - 60,580 60,580Subsidiary Dividend to Minority Share Holders - - - - - - (20,033) (20,033) Transferred from Investment in Associate - (1,728) - - - (1,728) - (1,728)Transferred to Reserves - - 446 - (446) - - - Profitfortheyear(NoteA) - - - - 219,959 219,959 12,600 232,559Balance as at 31st March 2010 (Re-stated) 1,114,558 8,709 1,790 3,000 (856,779) 271,279 248,106 519,384Transferred from Investment in Associate - 19,956 - - - 19,956 - 19,956 Transferred to Reserves - - 3,984 - (3,984) - - - Adjustment on Acquisition and Disposal of Subsidiary - (1,105) - - (62,110) (62,110) 211,232 148,018Share Issue Expenses - - - - (2,274) (2,274) (2,414) (4,688)Allocation for Life Solvency - - - - (20,128) (20,128) (21,372) (41,500)Profit for the year - - - - 988,018 988,018 162,997 1,151,015 Balance as at 31st March 2011 1,114,558 27,560 5,774 3,000 42,744 1,193,636 598,549 1,792,185




COMPANYFor the year ended 31st March Note Stated Accumulated

Capital Losses Total Rs.’000 Rs.’000 Rs.’000

Balance as at 1st April 2009 as previously stated 1,114,558 (1,015,176) 99,382 Prior year adjustment on Effect of Changes in Accounting Policies 36.�2 - 10,054 10,054 Balance as at 1st April 2009 (Re-stated) 1,114,558 (1,005,123) 109,435 RestatedProfitfortheyear(NoteA) - 170,797 170,797Balance as at 31st March 2010 (Re-stated) 1,114,558 (834,326) 280,232 Profit for the year - 465,229 465,229 Balance as at 31st March 2011 1,114,558 (369,095) 745,463

NoteA-EffectofChangesinAccountingPolicies Group Company Rs.’ 000 Rs.’ 000

Profit as reported previously 209,760 159,872 AdjustmentforMarkettoMarketValuation(Note36) 10,199 10,925 Restated Profit for the Year 219,959 170,797




A Quantum Leap

NotestotheFinancialStatements

1 REPORTING ENTITY

1.1 Domicile and Legal formAsia Capital PLC is a limited liability company incorporated and domiciled in Sri Lanka, and listed in the Colombo Stock Exchange.� The Registered Office of the Company and the principal place of business are both situated at Level 21 & 36, West Tower, World Trade Center, Colombo 01.�

The consolidated Financial Statements of Asia Capital PLC for the year ended 31st March 2011 comprise the Company and its subsidiaries (together referred to as the” Group” ) and the Group’s interests in associates.�

All the Group entities are limited liability companies, incorporated and domiciled in Sri Lanka.�

1.2 Principle Activities and Nature of Operations During the year the principle activities of the Group was stock brokering, corporate finance, asset management, margin trading, treasury management, dealing and investing in securities, financial services, hotels and insurance.�

During the year, the primary activity of the Company was to act as an investment holding company.�

1.3 Parent and Ultimate Parent EnterpriseIn the opinion of the Board of Directors, Asia Capital PLC does not have an identifiable parent of its own.�

1.4 Financial PeriodAll companies in the group other than Asian Alliance Insurance PLC, which ends on 31st December, have a common financial year, which ends on 31st March.�

1.5 Date of Authorisation for IssueThe Financial Statements were authorised for issue by theBoardofDirectorson18thNovember2011.

2 BASIS OF PREPARATION

2.1 Statement of ComplianceThe Consolidated Financial Statements have been prepared in accordance with the Sri Lanka Accounting Standards (SLAS), adopted by the Institute of Chartered Accountants of Sri Lanka, requirements oftheCompaniesActNo7of2007andSriLankaAccountingandAuditingStandardsAct,No.15of1995.�

2.2 Basis of MeasurementThe Financial Statements of the Group are prepared and presented on historical cost basis except for Property, Plant and Equipment, Investment Properties and Investment in Quoted Equity Securities in accordance with Sri Lanka Accounting Standards laid down by the Institute of Chartered Accountants ofSriLanka.Noadjustmentshavebeenmadefor inflationary factors affecting these Financial Statements.�

2.3 Responsibility for Financial StatementsThe Board of Directors is responsible for the preparation and presentation of the Financial Statements.�

2.4 Going ConcernThe Board of Directors has made an assessment of Group’s ability to continue as a going concern and they do not intend either to liquidate or cease operations.�

2.5 Functional Currency and Presentation Currency The individual Financial Statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’).� The Consolidated Financial Statements are presented in Sri Lankan Rupees, which is also the Company’s functional currency.� The figures are rounded to the nearest thousand rupees.�

2.6 Use of Estimates and JudgementsThe preparation of Financial Statements in conformity with Sri Lanka Accounting Standards (SLAS) require management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses.� The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of makingtheJudgementsaboutthecarryingvalueofassets and liabilities those are not readily apparent from other sources.� Actual results may differ from these estimates.�


The estimates and underlying assumptions are reviewed on an ongoing basis.� Revision to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.�

3 SIGNIFICANT ACCOUNTING POLICIES

3.1 Basis of Consolidation

3.1.1 SubsidiariesSubsidiaries are those entities controlled by the Company.� Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities.� The Financial Statements of Subsidiaries are included in the Consolidated Financial Statements from the date that control commences until the date the control ceases.�

The Financial Statements of the group represents the Consolidation of the Financial Statements of the company and its subsidiaries as mentioned below, inaccordancewiththeCompaniesActNo.7of2007,andtheSriLankaAccountingStandardsNo26“Consolidated and Separate Financial Statements”.�(Revised 2005)

Asia Securities (Private) Limited

Asian Alliance Insurance PLC

Asia Growth Fund 1 (Private) Limited

Asia Fort Sri Lanka Direct Investment Fund Limited

Investor Access Asia (Private) Limited

Asia Asset Finance Limited

Asia Apparel Trading (Private) Limited

Capital Reach Holdings Limited

Capital Reach Leasing PLC

Capital Reach Credit Limited

Capital Reach Business Development (Private) Limited

Asia Leisure Holdings (Private) Limited

Asia Leisure (Private) Limited

Asia Wealth Management Company (Private) Limited

3.1.2 Profits and Losses The total profit and losses of all the Subsidiaries are included in the Consolidated Income Statement with the proportion of profit or loss after taxation pertaining to the minority shareholders of Subsidiaries being deducted as “Minority Interest”.�

3.1.3 Assets and LiabilitiesAll assets and liabilities of the Company and its Subsidiaries are included in the Group Balance Sheet.� The proportionate interest of minority shareholders of Subsidiaries in the net assets of the Group, are indicated separately in the Consolidated Balance Sheet under the heading “Minority Interest”.�

3.1.4 Intra Group TransactionsIntra group balances, intra group transactions and resulting unrealized profits are eliminated in full in the ConsolidatedFinancialStatements.Unrealizedlossesresulting from intra group transactions are eliminated unless the cost can be recovered.�

3.1.5 Acquisition and Disposal of SubsidiaryThe purchase method of accounting is used to account for the acquisition of subsidiaries by the Group.� The cost of an acquisition is measured as the fair value of the assets given, equity of exchange, plus costs directly attributable to the acquisition.� Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest.� In respect of the acquisition where control is obtained, the excess of the cost of acquisition over the fair value of the Group’s share of identifiable net assets acquired is recorded as goodwill, and if the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in the Income Statement.� When the Parent’s interest in a subsidiary decreases due to dilution or disposal of the subsidiary, gains and losses due to changes in ownership are directly recognised in the Income Statement.�


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3.1.6 AssociatesInvestment in companies where the Company’s share of the holding is more than 20% and where the Company has a significant influence in financial and operating decisions of policies have been treated as investment in Associate Companies.� The results of these Companies have been accounted for on the equity method of accounting, where the investor’s share of profits or losses are incorporated in the Group’s Income Statement, and the related investments are presented in the Balance Sheet at values adjusted to reflect the investor’s share of retained earnings.� The carrying amount of the Company’s investment is reduced to the extent of the dividends received from these Associate Companies.�

3.1.7 Other InvestmentsInvestment in companies where the Group’s holding is less than 20% and where the group does not exercise significant influence and / or control over the financial and operating policies / decisions are accounted for on the basis stated in 3.�2.�4 below.�

3.1.8 Foreign Currency TranslationAll foreign exchange transactions are converted to Sri Lankan Rupees, which is the reporting currency, at the rates of exchange prevailing at the time the transactions were effected.� Insurance contracts which were underwritten in foreign currency are converted to Sri Lankan Rupees at the rates of exchange prevailing at the time of underwriting and Revenue is recognised accordingly.�

Monetary assets and liabilities denominated in foreign currencies are translated to Sri Lankan Rupee equivalents using year end spot foreign exchange rates.Nonmonetaryassetsandliabilitiesaretranslatedusing exchange rates that existed when the values were determined.� The resulting gains and losses are accounted for in the Statement of Income.�

3.2 Assets and Bases of their Valuation

3.2.1 Property, Plant and Equipment

3.2.1.1 Recognition and MeasurementThe Property, Plant & Equipment are stated at cost less accumulated depreciation which is provided on the bases specified below.� The cost of the asset is the

cost of acquisition or construction together with any expenses incurred in bringing the asset to its working condition for its intended use.� Expenditure incurred for the purpose of acquiring, extending or improving assets of permanent nature by means of which to carry on the business or to increase the earning capacity of the business has been treated as capital expenditure.�

Where items of Property, Plant and Equipment are subsequent revalued, the entire class of such assets is revalued at fair value.�

When an asset is revalued, any increase in the carrying amount is credited directly to a revaluation reserve, except to the extent that it reverses a revaluation decrease of the same asset previously recognized in the Income Statement, in which case the increase is recognized in the Income Statement, any revaluation deficit offset a previous surplus in the same asset is directly offset against the surplus in the revaluation reserve and any excess recognized as an expense.� Upondisposal,anyrevaluationreserverelatingtotheasset sold is transferred to retained earnings.�

3.2.1.2 Subsequent Costs/ReplacementThe cost of replacing part of an item of Property, Plant and Equipment is recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably.� The costs of the day-to-day servicing of Property, Plant & Equipment are recognized in the Income Statement as incurred.�

When replacement costs are recognized in the carrying of an item of Property, Plant & equipment, the remaining carrying amount of the replaced part is derecognized.�

3.2.1.3 Leased Assets

a) Finance LeasesAssets used by the Group, which have been funded through finance leases, are reflected in the Balance Sheet at an amount equal to the lower of its fair value and present value of minimum lease payments and the resulting lease obligations are included as creditors, net of finance charges.� Subsequent to



the initial recognition the asset is accounted for in accordance with the accounting policy applicable to that asset.� Assets held under finance leases are amortised over the estimated useful lives unless ownership is not transferred at the end of the lease period.� In such cases the assets are amortised over the shorter of the lease term and their useful lives.�

b) Operating LeasesLeases where the lessor effectively retains substantially all the risks and rewards of ownership over the leased term are classified as operating leases.� Lease payments (excluding costs for services such as insurance and maintenance) paid under operating leases are recognized as an expense in the Statement of Income on a straight-line basis over the lease term.�

3.2.1.4 DepreciationProvision for depreciation is calculated on the cost of Property, Plant and Equipment in order to write off such amounts over the estimated useful lives of such assets.� Lease assets are depreciated over the shorter of the lease term and other useful lives unless it is reasonably certain that the group will obtain ownership by the end of the lease period.�

The rates of depreciation used on a straight line method are as follows:Buildings and Improvements 5%-10%

Computer Equipment 10%-20%

Office Equipment 10%-20%

Furniture and Fittings 10%-20%

Fixtures and Fittings 10%

Motor Vehicles 20%-25%

Plant and Machinery 15%

Hotel Equipment 15% -25%

3.2.1.5 De-recognitionAn item of Property, Plant and Equipment is de-recognised upon disposal or when no future economic benefits are expected from its use.� Any gain or loss arising on de-recognition of the asset is included in the Statement of Income in the year the asset is de-recognised.� When replacement costs are recognised in the carrying amount of an item of

Property, Plant & Equipment, the remaining carrying amount of the replaced part is derecognised.�

3.2.1.6 Capital WIPCapital expenses incurred during the year which are not completed as at the Balance Sheet date are shown as Capital WIP, whilst the capital assets which have been completed during the year and put to use have been transferred to Property, Plant and Equipment

Property, Plant and Equipment are depreciated from the month the assets are available for use over their estimated useful lives.�

3.2.2 Intangible Assets

3.2.2.1 Goodwill The goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired subsidiary at the date of acquisition.� The goodwill on acquisitions of subsidiaries is included in intangible assets.� The separately recognised goodwill is tested annually for impairment and carried at cost less accumulated impairment losses.� The impairment losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold are recognized in the income statement.� Goodwill is allocated to cash-generating units for the purpose of impairment testing.� The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination.�

3.2.2.2 Computer SoftwareAcquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific software.� These costs are amortised over their estimated useful lives (Maximum five years).� Costs associated with maintaining computer software programmes are recognised as an expense as incurred.� Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the Group are recognised as intangible assets when the following criteria are met,


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• itistechnicallyfeasibletocompletethesoftwareproduct so that it will be available for use;

• managementintendstocompletethesoftwareproduct and use or sell it;

• thereisanabilitytouseorsellthesoftwareproduct;

• itcanbedemonstratedhowthesoftwareproductwill generate probable future economic benefits;

• adequatetechnical,financialandotherresourcestocomplete the development and to use or sell the software product are available; and

• theexpenditureattributabletothesoftwareproductduring its development can be reliably measured.�

Directly attributable costs that are capitalised as part of the software product include the software development employee costs and an appropriate portion of relevant overheads.� Other development expenditures that do not meet these criteria are recognised as an expense as incurred.� Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.� The computer software costs recognised as intangible assets are amortised over their estimated useful lives (not exceeding five years).�

3.2.3 Investment PropertiesInvestment property, comprising freehold land and buildings, is property held to earn rental income or for capital appreciation or both, is not occupied substantially for the production or supply of goods or services or for administrative purposes, and is not intended for sale in the ordinary course of business.� Investment property is initially measured at its cost including related transaction costs and is therefore carried at its cost less any accumulated depreciation and any accumulated impairment losses.� The group entities accounts for Investment Property using Cost Model as referred to in SLAS 40-“Investment Property”.�

3.2.4 Investments

3.2.4.1 Current Investments

a) Investments in Trading Equity Shares

QuotedInvestments made in equity shares with the intention of disposing in the near future are valued at market value.� The market value is determined onanaggregateportfoliobasis.Unreliasedgainsand losses on investments carried at market value i.�e.� reduction to market value and reversals of such reductions required to reflect the investments at the market value, are credited or charged to the Income Statement.�

UnquotedCurrent investments in unquoted shares are stated at cost unless otherwise stated.�

b) Investment in Government Securities Investment in treasury bills, treasury bonds and repurchase agreement are stated at cost, and interest is accrued over the maturity period.�

c) Investment in Debt Instruments and Bank Deposits Investment in Debt Instruments, Bank Deposits, and Term Deposits are stated at cost and interest is accrued over maturity period.� Cost of an investment is the cost of acquisition inclusive of brokerage fees, duties and bank fees.�

3.2.4.2 Long Term InvestmentsWhere the Group’s interest in equity capital is less than 20% or where the Group does not exercise significant influence or control over the financial and operating policies, investments are stated at cost.�

QuotedandUnquotedinvestmentsinsharesheldon long term basis are stated at cost in the parent Company’s Financial Statements, investment in Subsidiaries and Associates are carried at cost under parent Company’s Financial Statements.�

Provision for diminution in value is made when in the opinion of the directors there has been a decline, other than temporary in the value of the investment.�



3.2.5 Inventories

Real Estate StockReal estate stock comprises all costs of purchase, cost of conversion and other costs incurred in bringing the real estate to its saleable condition less repayments.�

Purchase Cost - Land Cost with legal chargesCost of conversion - Actual Development costs including the borrowing cost up to the completion of development.�

Vehicle StockUnsoldvehiclesatBalanceSheetdatearevaluedatthe lower of cost and net realisable value, after making due allowances for obsolete and slow moving items.� NetRealisablevalueisthepriceatwhichinventoriescan be sold in the ordinary course of business less the estimated cost necessary to make the sale.�

Consumer DurablesOther inventory materials at Balance Sheet date are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items.�

Food & BeveragesStock of Food and Beverages are carried at lower of cost and net realisable value, whichever is lower.�

3.2.6 Trade and Other ReceivablesLoans, advances and other receivables are stated in the Balance Sheet at their estimated realizable amounts, net of provisions for bad and doubtful receivables.� Other receivables and dues from related parties are recognized at cost less provision for bad and doubtful receivables.�

3.2.7 Loans and Advances to CustomersLoans and Advances to customers are stated in the Balance Sheet net of provision for possible loan losses.�

Provision for Loan LossesSpecific provisions for possible loan losses are based on a continuous review of the loan and advances portfolio in accordance with Sri Lanka Accounting StandardNo.33-“RevenueRecognitionandDisclosures in the Financial Statements of the Finance

Companies” and the parameters set by the Central Bank of Sri Lanka.� Accordingly specific provisions have made as follows;

Period Outstanding Provision made net of Realisable Value of Securities

6 to 12 months 50%

Over 12 Months 100%

3.2.8 Lease DebtorsAssets leased to customers, which transfer substantially all the risk and rewards associated with ownership other than legal title are accounted for as finance leases.�

Amounts receivable under finance leases net of initial rental received, unearned lease income and provision for doubtful recovery are classified as lease receivable in the Balance Sheet.�

Specific provision has been made in relation to identified bad and doubtful leases as follows;

Period Outstanding Provision made net of Realisable Value of Securities

6 to 12 months 50%

Over 12 Months 100%

Hire Purchase AgreementsAssets granted under the agreement that transfer substantially all the risks and rewards associated with ownership other than the legal title are classified as Hire Purchase.� Hire Purchase installments receivables in the Balance Sheet include total Hire Purchase installments due net of unearned interest, interest is suspense and provision for doubtful debts.�

3.2.9 Premium ReceivableCollectability of premium and other debtors are reviewed on an ongoing basis.� Debts, which are known to be uncollectible, are written off.� A provision for doubtful debts is raised for any long outstanding receivables in terms of a policy agreed by the Board of Directors.�


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3.2.10 Reinsurance ReceivableReinsurance assets include the balances due from both insurance and reinsurance companies for paid and unpaid losses and loss adjustment expenses.� Amounts recoverable from reinsurers are estimated in a manner consistent with the claim liability associated with the reinsured policy.� Reinsurance is recorded gross in the Balance Sheet unless a right to off set exists.�

3.2.11 Cash and Cash EquivalentsCash and cash equivalents are defined as cash in hand, demand deposits and short term highly liquid investments, readily convertible to known amounts of cash and subject to insignificant risk of changes in value.�

For the purpose of Cash Flow Statement, cash and cash equivalents consist of cash in hand and deposits at banks net of outstanding bank overdrafts.�

3.2.12 Impairment of AssetsThe carrying amounts of the Group’s non-financial assets, other than deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment.� If any such indication exists, then the asset’s recoverable amount is estimated.� For goodwill and intangible assets that have indefinite lives or that are not yet available for use, recoverable amount is estimated at each reporting date or more frequently, if events or changes in circumstances indicate that it might be impaired.�

An impairment loss is recognized if the carrying amount of an asset or its cash - generating units exceeds its recoverable amount.� A cash generating unit is the smallest identifiable asset group that generates cash flows that largely are independent from other assets and groups.�

Impairment losses are recognised in the Income Statement.� Impairment losses recognised in respect of Cash generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of other assets in the unit ( group of units ) on pro rata basis.�

The recoverable amount of an asset or Cash generating unit is the greater of its value in use and its fair value less costs to sell.� In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.�

An impairment loss in respect of goodwill is not reversed.� In respect of other assets, impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists.� An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount.� An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.�

3.3 Liabilities and Provisions

3.3.1 ProvisionsProvisions are recognized when the company has a present obligation (legal or constructive) as a result of a past event, where it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.�

3.3.2 LiabilitiesAll known liabilities have been accounted for in preparing the Financial Statements.� Provision and liabilities are recognized when the Group has a legal or constructive obligation as a result of past events and it is probable that an outflow of economic benefits will be required to settle the obligation.�

3.3.2.1 Current LiabilitiesLiabilities classified as current liabilities in the Balance Sheet are those obligations expected to be settled in the entity’s normal operating cycle, it is held primarily for the purpose of being traded, it is due to be settled within twelve months after the balance sheet date, or the entity does not have an unconditional right to defer settlement of the liability for at least twelve months after the balance sheet date.�



3.3.2.1.1 Trade and Other Payables Trade and other payables are stated at their cost.�

3.3.2.1.2 Reinsurance PayablesReinsurance liability consists of reinsurance premium due to reinsurers in respect of the reinsurance contracts that are entered into by the Company.�

3.3.2.2 Non Current LiabilitiesAll liabilities other than current liabilities are classified as ‘non-current liabilities’.�

3.3.2.2.1 Retirement Benefit Obligations

a) Defined Benefit Plan – Gratuity Provision has been made for retirement gratuities from the first year of service for all employees in conformity with SLAS 16- Employee Benefits (Revised 2006).�

The liability recognized in the Balance Sheet in respect of defined benefit plans is the present value of the defined benefit obligation at the balance sheet date less fair value of the plan assets, together with adjustments for unrecognized past service cost.� The defined benefit obligation is calculated by the companyusing“ProjectedUnitCreditMethod”basedon the formula prescribed in Sri Lanka Accounting StandardNo.16-“EmployeeBenefits”(Revised2006)

The present value of defined benefit obligation is determined by discounting the estimated future cash flows using the interest rates of high quality corporate bonds that are denominated in currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related retirement obligations.�

However, according to the Payment of Gratuity Act No.12of1983,theLiabilityforGratuityPaymenttoanemployee arises only after the completion of five years continued service with the company.�

This liability is not externally funded nor actuarially valued except for which gratuity liability is actuarially valued by Asian Alliance Insurance PLC as required by the Sri Lanka Accounting Standard 16-“Employee Benefits” (Revised 2006).�The item is grouped under non current liabilities in the Balance Sheet.�

b) Defined Contribution Plans Employees Provident Fund and Employees Trust Fund

All employees who are eligible for Employees Provident Fund contribution and Employees Trust Fund contribution are covered by relevant contribution funds in line with respective statutes and regulations.�

The Company contributes 12 % and 3% of gross emoluments of employees to Employees’ Provident Fund and Employees’ Trust Fund respectively.�

3.4 Income Statement

3.4.1 Revenue Group revenue represents proceeds from the sale of investments, dividends, underwriting commissions, brokerage income, interest income and lease and hire purchase income.�

The Company revenue represents proceeds from sale of investments, dividends and interest income.�

3.4.1.1 Revenue RecognitionRevenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.� The following recognition criteria must also be met before revenue is recognized.�

3.4.1.1.1 Investments

a) Corporate and Government SecuritiesInterest income and capital gains on sale of securities are recognized on an accrual basis.�

b) Income from Fee Based Activities Income from consultancy fees is recognised in the period in which such transactions were effected.�

3.4.1.1.2 Stock BrokingBrokerage income is recognised in the period in which such transactions were effected.�


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3.4.1.1.3 Deposit Mobilisation and Credit

a) Interest Income from Leases and Hire Purchase ContractsIncome from leases is recognized on the basis of the method of financing.� The excess of aggregate rental receivable over the cost of the leased assets consists of the total unearned income at the commencement of the contract.� The unearned income is taken into revenue over the term of the lease, commencing from the month in which the lease is executed, in proportion to the declining receivable balance of the lease.�

Interest ceases to be taken to revenue where any portion of interest or principal is in arrears for more than six months and thereafter such interest is recognized on cash basis.�

b) Interest Income from Loans and Advances Interest Income from Loans and Advances is recognized on an accrual basis.� Interest ceases to be taken into revenue when the interest or principal is in arrears for six months or more and thereafter interest is recognized on a cash basis.�

c) Overdue InterestOverdue interest income from leasing, hire purchase and other form of loans and advances have been accounted for on cash basis.�

3.4.1.1.4 Insurance Non-Life(General)InsuranceBusiness

a) Gross Written PremiumGross Written Premium is generally recognised as writtenuponinceptionofthepolicy.Uponinceptionof the contract, premiums are recorded as written and are earned primarily on a pro-rata basis over the term of the related policy coverage.� However, for those contracts for which the period of risk differs significantly from the contract period, premiums are earned over the period of risk in proportion to the amount of insurance protection provided.� Earned premiums are calculated on the 365 basis except for marine business, which is computed on a 60-40 basis.�

b) Reinsurance premiumReinsurance premium expense is recognised in the same accounting period as the gross written premium to which it relates or in accordance with the pattern of reinsurance services received.�

c) Unearned PremiumThe unearned premium reserve represents the portion of the gross written premium and reinsurance premium written in the current year but relating totheunexpiredperiodofcoverage.Unearnedpremiums are calculated on the 365 basis except for marine business, which is computed on a 60-40 basis in accordance with the rules made by the Insurance Board of Sri Lanka.�

d) Unexpired RisksProvision is made where appropriate for the estimated amount required over and above unearned premium to meet future claims and related expenses on the business in force the balance sheet date.�

e) ClaimsClaims expense and a liability for outstanding claims are recognised in respect of direct and inwards reinsurance business.� The liability covers claims reportedbutnotyetpaid,IBNR(IncurredButNotReported)claims,IBNER(IncurredButNotEnoughReported) and the anticipated direct and indirect costs of settling those claims.� Claims outstanding are assessed by review of individual claim files and estimating changes in the ultimate cost of settling claims.TheprovisioninrespectofIBNR&IBNER(IncurredButNotEnoughReported)isactuariallyvalued to ensure a more realistic estimation of the future liability based on past experience and trends.� Actuarial valuations are performed on an annual basis.� While the directors consider that the provision for claims is fairly stated on the basis of information currently available, the ultimate liability will vary as a result of subsequent information and events.� This may result in adjustments to the amounts provided.� Such amounts are reflected in the Financial Statements for that period.� The methods used and the estimates made are reviewed regularly.�



f ) Deferred Acquisition CostsDeferred Acquisition Costs represents commissions and reinsurance commission, which are deferred and amortised over the period in which the related written premiums are earned.� This is computed on the 365 basis.�

Insurance – Life (Long term) Insurance BusinessPremiums from traditional long term insurance contracts, including participating contracts & annuity policies with life contingencies, are recognised as revenue when cash is received from the policyholder.� Benefits and expenses are provided against such revenue to recognise profits over the estimated life of the policies.�

The single premium contracts premiums are recognised as income when cash is received.�

g) Reinsurance ContractsOutward reinsurance premiums are recognised when payable.� Reinsurance recoveries are credited to match the relevant gross claims.�

h) ClaimsDeath claims are recorded on the basis of notifications received.� Surrenders, maturities and annuity payments are recorded when due.� Claims payable includes direct costs of settlement.� The interim payments and surrenders are accounted only at the time of settlement.� The actuarial valuation takes into account all liabilities and is based on assumptions recommended by the Consultant Actuary.�

i) Insurance Provision LifeLong duration contract liabilities included in the Long Term Insurance Fund, result primarily from traditional participating and non-participating Long Term Insurance products.� Short duration contract liabilities are primarily group term, accident and health insurance products.� The actuarial reserve/insurance provision has been established based upon the following,

- Interest rates which vary by product, as required by regulations issued by the Insurance Board of Sri Lanka.�

- Mortality rates based on published mortality tables adjusted for actual experience, as required by Regulations issued by the Insurance Board of Sri Lanka.�

- Surrender rates based upon actual experience.�

The amount of policy holder bonus to be paid is determined annually by the Company, on the advice of the Actuary.� The bonus includes life policy holders’ share of distributable surplus as certified by the Actuary that are required to be allocated by the insurance contract or by insurance regulations.�

3.4.1.1.5 Leisure

a) Room RevenueRoom Revenue is recognised on the rooms occupied on daily basis.�

b) Food & BeverageFood & Beverage Revenue is recognised at the time of sale.�

3.4.1.1.6 Dividend Income Dividend income is recognized when the Company’s right to receive such dividend is established.�

3.4.1.1.7 Other Income and Gains Other income and gains are recognised on an accrual basis.NetGainsandlossesofarevenuenatureonthedisposal of Property, Plant & Equipment and other non current assets including investments have been accounted for in the Statement of Income, having deducted from proceeds on disposal, the carrying amount of the assets and related selling expenses.�

3.4.2 Expenditure Recognition a) All expenditure incurred in running of the business

and in maintaining the Property, Plant & Equipment in a state of efficiency has been charged to Income Statement in arriving at the profit for the year.�

b) Borrowing costs are recognized as an expense in the period in which they are incurred.�

c) For the purpose of presentation of Income Statement, the Directors are of the opinion that


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the nature of expenses method / present fairly the elements of the enterprises performance, hence such presentation method is adopted.�

3.5 Taxation

3.5.1 Taxes on IncomeThe group liability to taxation is computed in accordance with the provisions of the Inland RevenueAct.No.10of2006(asamended)takingintoconsideration the maximum relief available.�

3.5.2 Deferred TaxationDeferred tax is recognized using the Balance Sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.� Deferred tax is not recognized for the following temporary differences; the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profits, and differences relating to investments in Subsidiaries to the extent that they probably will not reverse in the foreseeable future.� In addition, deferred tax is not recognized for taxable temporary differences arising on the initial recognition of goodwill.� Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.� Deferred tax assets and liabilities are offset if there is a legally enforceable right exists to such set off.�

Economic Service ChargeAs per the provisions of the Economic Service charge ActNo.13of2006,ESCispayableontheliableturnover at specified rates.� ESC is deductable from the income tax liability.� Any unclaimed liability can be carried forward and set off against the income tax payable as per the relevant provisions on the Act.�

3.5.3 VAT on Financial ServicesValue base for Value Added Tax is the adjusted accounting profit before income tax, in respect of economic depreciation and emoluments for employees.�

3.6 Related Party Transactions Disclosure has been made in respect of the transactions in which one party has the ability to control or exercise significant influence over the financial and operating policies/decisions of the other, irrespective of whether a price is being charged.�

3.7 Earnings Per Share The Group presents basic Earnings per share (EPS) for its ordinary shares.� Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of shares outstanding during the period.�

3.8 Comparative InformationThe comparative information is re-classified wherever necessary to conform with the current Year’s presentation in order to provide a better presentation.� The re-classified information is described in the Note35.

3.9 Changes in Accounting PoliciesThe accounting policies adopted are consistent with those of the previous financial year except where voluntary changes have been made.� The principal effects of this decision are discussed below and in Note36.

Voluntary changes in Accounting policy for the Treatment of Investment in Trading Equity Shares (Quoted)

During the year ended 31 March 2011, the Company & Group voluntarily changed its accounting policy for the treatment of Investment in Trading Equity Shares (Quoted).� The Company & Group now value the Trading Equity Shares (Quoted) at market value on aggregate portfolio basis rather than lower of cost and market value on an individual investment basis, as it believes that this policy provides reliable and more relevant information because it results in a more transparent and comparable treatment of Investment in Trading Equity Shares (Quoted).�



3.10 Events Occuring after the Balance Sheet Date All material post balance sheet events have been considered and where appropriate adjustments or Disclosures have been made in the Financial Statements.�

3.11 Commitments & Contingencies Commitments and contingencies as at the balance sheet date are disclosed in the Financial Statements.�

3.12 Business Segment Reporting A segment is a distinguishable component of an enterprise that is engaged in either providing products or services (Business Segments) or in providing products or services within a particular economic environment (Geographical Segments) which is subject to risks and rewards that are different from those of other segments.�

Segment information is presented in respect of Group’s business.� There are no distinguishable components to be identified as geographical segment of the group.� The business segments are reported based on the Group’s management and internal reporting structure.�

Segment assets are those operating assets that are employed by a segment in its operating activities and directly attributable to the segment or allocated to the segment on a reasonable basis.�

Segment liabilities are those operating liabilities that result from the operating activities of a segment and directly attributable to the segment or allocated to the segment on a reasonable basis.�

3.13 Cash Flow StatementThe Cash Flow Statement has been prepared using the “indirect method”.� Interest paid is classified as operating cash flows, interest and dividends received are classified as investing cash flows while dividends paid and government grants received are classified as financing cash flows for the purpose of presenting of Cash Flow Statement.�

4. New Accounting Standards Issued but not effective as at the Balance Sheet Date The Institute of Chartered Accountants of Sri Lanka has issued new volume of Sri Lanka Accounting standards which will become applicable for financial periodsbeginningonorafter1stJanuary2012.Accordingly, these standards have not been applied in preparing these Financial Statements as they were not effective for the year ended 31st March 2011.�

These Sri Lanka Accounting standards comprise accounting standards prefixed both SLFRS (corresponding to IFRS) and LKAS (corresponding to IAS).� Application of Sri Lanka Accounting Standards prefixed SLFRS and LKAS for the first time shall be deemed to be an adoption of SLFRSs.�

The Company and Group is currently in the process of evaluating the potential effects of these Standards on its Financial Statements and the impact on the adoption of these Standards have not been quantified as at Balance Sheet date.�



Rs.’000 Rs.’000 Rs.’000 Rs.’000 Re-stated Re-stated

5 REVENUE

5.1 Summary Gross Revenue 2,257,108 1,390,488 303,344 371,120 Less: Intra Group Transactions (134,191) (62,065) - -

2,122,917 1,328,423 303,344 371,120

5.2 Segments Investments 273,395 348,845 303,344 371,120 Stock Broking & Investment Banking 836,694 375,849 - - Deposit Mobilisation and Credit 478,506 542,108 - - Insurance 470,717 43,961 - - Leisure 63,605 17,660 - - 2,122,917 1,328,423 303,344 371,120

5.3 Goods and Services Analysis Rendering of Services 2,122,917 1,305,323 303,344 371,120 Sale of Goods - 23,100 - - 2,122,917 1,328,423 303,344 371,120

6 OTHER OPERATING INCOMEDividend Income 11,319 116 - - Gains on Disposal of Property, Plant and Equipment 1,630 1,395 1,362 1,395Gain on Disposal of Investment Property 7,721 2,821 - - Realised Capital Gain 148,883 492 - - UnrealisedCapitalGain 143,415 10,199 20,601 10,925Gain on Disposal of Subsidiary 350,772 78,494 138,353 98,481 Gain on Disposal of Associate - - 161,466 - Profit on Settled Contracts 35,737 9,552 - -Sundry Income 74,773 28,602 10,045 1,191 Guarantee Fees 1,252 1,776 1,252 1,776 Management Fees 868 1,500 31,619 1,800 776,370 134,947 364,698 115,568

7 NET FINANCE INCOME/(COSTS) Financing Income Interest Income 129,012 32,407 67,521 27,904 129,012 32,407 67,521 27,904 Financing Cost Interest on Overdraft (30,156) (43,066) (46,348) (41,743) Interest on Other Borrowings (69,276) (35,463) (53,215) (41,794) (99,432) (78,529) (99,563) (83,537) NetFinanceIncome/(Costs) 29,580 (46,122) (32,042) (55,633)

NotestotheFinancialStatementsA Quantum Leap




8 PROFIT BEFORE TAXATION Profit Before Tax is stated after

charging all expenses including the following : Auditors Remuneration - Audit 3,672 2,896 1,050 1,050 -NonAudit 408 85 - - Director’s Emoluments 30,687 46,925 7,191 3,350 Director’s Fees 4,268 1,870 3,828 1,167 Secretarial Fees 1,508 2,748 422 1,032 Depreciation 49,230 30,235 5,113 3,775 Legal Fees 5,003 3,187 - 953 Personnel Costs Include; Defined Benefit Plan - Gratuity 22,622 8,274 1,973 2,816 Defined Contribution Plan Costs - EPF and ETF 35,418 28,862 3,326 3,878 Staff Incentives 7,663 41,964 1,230 2,373 Other staff Costs 318,308 211,603 36,044 35,651

9 INCOME TAX EXPENSESCurrentTaxExpenses-Company(Note9.1) 1,924 10,126 1,924 10,126CurrentTaxExpenses-Subsidiaries(Note9.2) 169,284 33,277 - -Current Tax Expense - Total 171,208 43,403 1,924 10,126UnderProvisioninRespectofPriorYears 25 - - -Social Responsibility Levy & Economic Service Charge 4,844 585 29 152 Withholding Tax on Dividends Received from Group Companies 14,502 2,792 12,172 2,394 DeferredTaxationCharge/(Reversal)(Note27) (9,667) 19,655 - - 180,912 66,435 14,125 12,672

9.1 Reconciliation of Accounting Profit / (Loss) & Taxable Income Accounting Profit before tax 1,331,927 298,994 479,354 183,470 Aggregate disallowed items 14,681 51,751 (28,384) (7,811)Aggregate allowable items (62,860) (132,706) (25,034) (14,611)Expenses not subject to tax (417,477) (142,166) (417,477) (116,536)Tax Profit on Trade or Business 866,271 75,873 8,459 44,512 Other Taxable Income 4,469 4,074 - - Tax Losses Set off under section 32 (19,910) (59,310) (2,961) (15,589)Taxable Income 850,830 20,637 5,498 28,923 Income Tax @ 35% 170,016 43,403 1,924 10,126Income Tax @ 10% 1,192 - - - Current tax expense 171,208 43,403 1,924 10,126

9.1.1 Reconciliation of Accumulated Tax LossesOpening Balance 1,270,836 2,851,509 562,561 578,150 On Disposal of Subsidiary (1,918) (1,710,076) - - Loss for the Year 34,066 188,713 - - LossUtilisedduringtheYear (19,910) (59,310) (2,961) (15,589) 1,283,074 1,270,836 559,600 562,561



Rs.’000 Rs.’000 Rs.’000 Rs.’000

9.2 Subsidiary Companies Asia Securities (Private) Limited 146,487 27,923 - - Asia Leisure Holdings (Private) Limited 15 - - -Asia Growth Fund 1 (Private) Limited - - - - Asian Alliance Insurance PLC - - - - Capital Reach Holdings Limited 19,502 4,441 - - Investor Access Asia (Private) Limited 1,192 - - - Asia Asset Finance Limited 1,831 - - - Asia Wealth Management Company (Private) Limited 257 418 - - Asia Fort Sri Lanka Direct Investment Fund Limited - 495 - - 169,284 33,277 - -

9.3 SummaryAsia Securities (Private) Limited The Company is liable to taxation at the rate of 35% (2010 - 35%) on its taxable profits.� The Income Tax Liability for the current year was Rs.� 146,487,069/- (2010 - Rs.�27,923,497/-).�

Asia Fort Sri Lanka Direct Investment Fund Limited The Company is liable to taxation at the rate of 35% (2010 - 35%) on its taxable profits.� However no provision has been made due to tax loss of Rs.� 30,934,014 /- (Tax Liability in 2010 - Rs.� 495,047/-).�

Asia Growth Fund 1 (Private) Limited The Company is liable to taxation at the rate of 35% (2010 - 35%) on its taxable profits.� However no provision has been made due to tax loss of Rs.�1,497,302/- (2010 - Rs.� 1,224,775/-).�

Asia Asset Finance Limited The Company is liable to taxation at the rate of 35% (2010 - 35%) on its taxable profits.� The Income Tax Liability for the current year was Rs.� 1,831,368/- (carry forward tax loss in 2010 - Rs.� 511,414,127/-).�

Investor Access Asia ( Private) Limited The Company is liable to taxation at the rate of 10% (2010 - Exempted) on its taxable profits.� The Income Tax Liability for the current year was Rs.� 1,192,014/- (2010 - Exempted).�

Asia Wealth Management Company (Private) Limited The Company is liable to taxation at the rate of 35% (2010 - 35%) on its taxable profits.� The Income Tax Liability for the current year was Rs.� 257,170/- (2010 - 418,095/-).�

Asia Leisure Holdings (Private) Limited (Formally known as Taru Villas Holdings (Private) Limited) The Company and it’s subsidiary, Asia Leisure (Private) Limited are liable to taxation on Hotel Profit & Income at the rate of 35% (2010-35%)TheIncomeTaxLiabilityforthecurrentyearwasRs.14,812/-(2010-Nil).

Capital Reach Holdings (Private) LimitedThe Company and it’s subsidiaries are liable to tax at 35% (2010 - 35%).� The Income Tax Liability for the current year was Rs.�19,502,110/- (2010 - Rs.� 4,441,169).�



9.3 Summary (Contd.)Asian Alliance Insurance PLC The Company is liable to taxation at the rate of 35% (2010 - 35%) on its taxable profits.� However no provision has been made due to tax loss of Rs.� 2,382,946 /- (2010 -Rs.�2,098,966/-).�

10 BASIC EARNINGS PER SHARE 10.1 Basic Earnings Per Share is calculated by dividing the profit attributable to ordinary shareholders for the year by the weighted

average number of ordinary shares outstanding during the year.�

10.2 The following data has been used in the computation of the basic earnings per share:



Profit after tax attributable to Ordinary Shareholders (Rs.�) 988,017,521 219,958,580 465,229,431 170,797,652 Weighted Average number of Ordinary Shares outstanding during the Year 110,000,000 110,000,000 110,000,000 110,000,000 Basic Earnings Per Share (Rs.�) 8.�98 2.�00 4.�23 1.�55

11 PROPERTY, PLANT AND EQUIPMENT

11.1 Group

11.1.1 Cost/Valuation Balance Acquisition of Additions Disposals/ Disposal of Balance As At Subsidiary Transfers Subsidiary As At

01.04.2010 31.03.2011 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000

Freehold Assets Land 175,000 - - - - 175,000 Buildings and Improvements 60,657 - - - - 60,657 Motor Vehicles 33,143 4,110 8,646 (9,552) (8,619) 27,728 Motor Vehicles Hired-Out to Customers 8,073 - - (3,898) (4,176) - Office Equipment 51,895 32,289 12,063 (2,814) (18,582) 74,851 Fixtures and Fittings 28,099 38,389 10,167 (282) - 76,373 Furniture and Fittings 65,238 30,277 17,706 - (12,380) 100,841 Computer Equipment 93,229 68,323 27,106 - (14,635) 174,022 Plant and Machinery 1,337 - - - - 1,337 Hotel Equipment 13,201 - 268 - - 13,468

529,872 173,388 75,956 (16,546) (58,392) 704,277


11 PROPERTY, PLANT AND EQUIPMENT (Contd.)

11.1 Group

Cost / Valuation Balance Acquisition of Additions Disposals/ Disposal of Balance As At Subsidiary Transfers Subsidiary As At

01.04.2010 31.03.2011 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000

Leasehold Assets Motor Vehicles 9,488 - 18,504 (303) (7,057) 20,632 Office Equipment 707 - - - (707) - Furniture and Fittings 3,590 - - - (3,590) - 13,785 - 18,504 (303) (11,354) 20,632 Total 543,657 173,388 94,460 (16,849) (69,746) 724,909

11.1.1.1 In the Course of Construction Balance Acquisition of Incurred Reclassified/ Disposal of Balance

As At Subsidiary During Transferred Subsidiary As At 01.04.2010 the Year 31.03.2011 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000

Building Work in Progress - - 2,412 - - 2,412

11.1.2 Depreciation Balance Acquisition of Charge Disposals / Disposal of Balance

As At Subsidiary for the Transfers Subsidiary As At 01.04.2010 year 31.03.2011 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000

Freehold AssetsBuildings and Improvements 18,725 - 7,836 - - 26,561 Motor Vehicles 25,471 1,077 3,059 (8,477) (3,153) 17,977 Motor Vehicles Hired-Out to Customers 4,199 - - (63) (4,135) -Office Equipment 28,728 17,852 7,446 (237) (10,507) 43,282 Fixtures and Fittings 16,355 21,058 8,892 - - 46,305 Furniture and Fittings 32,003 12,890 8,837 (972) (4,618) 48,104 Computer Equipment 77,520 59,252 7,161 (2,027) (10,890) 131,016 Plant and Machinery 1,165 - 62 - - 1,227 Hotel Equipment 5,527 - 3,228 - - 8,755 Leasehold Assets Motor Vehicles 3,442 - 1,983 (156) (2,308) 2,961 Office Equipment 330 - - - (330) -

Furniture and Fittings 2,155 - - - (2,154) - Total Depreciation 215,620 112,129 48,467 (11,931) (38,858) 326,188

11.1.3 Net Carrying Value 328,038 38,096 401,132



11.1.4 Property, Plant & EquipmentThe fair value of land was determined by means of a revaluation during the financial year 2009-2010 by an independent valuer [(DeshabandhuProfessor(Dr.)HamindaHaegoda-A.I.V(SriLanka),S.C.V.(USA),D.I.P.F.M.(UK)]withreferencetomarketbasedevidence.� The results of such revaluation has been incorporated in the Financial Statements 2009/2010 from its effective date which is 31/12/2009.� The surplus arising from the revaluation has also been transferred to a revaluation reserve at that date.�

The carrying amount of revalued assets that would have been included in the financial statements had the assets been carried at cost is as follows:

Class of Assets Net Carrying Net Carrying Amount Amount 2011 2010 Rs.’000 Rs.’000

Free hold land (Cost) 54,594 54,594

Details of the Land owned by the Group are as follows.

Building Land RevaluedLocation/Address Sq/Ft Acre Extent Rood Perch Amount

Rs.’000

The River House 14,767 6 1 36 90,000No70,UttamanayaMawatha,Balapitiya

Balapitiya Beach Property - 1 0 10 85,000 175,000

11.2 Company

Cost Balance Additions Disposals / Balance As At Transfers As At 01.04.2010 31.03.2011 Rs.’000 Rs.’000 Rs.’000 Rs.’000

Freehold Assets Motor Vehicles 9,897 - - 9,897 Office Equipment 5,524 3,883 - 9,407 Fixtures and Fittings 14,683 60 - 14,743 Furniture and Fittings 16,511 10,433 - 26,944 Computer Equipment 28,271 2,647 - 30,918

Leasehold Assets Motor Vehicles - 18,504 - 18,504 Total 74,886 35,527 - 110,413


11 PROPERTY, PLANT & EQUIPMENT (Contd.)

11.2 Company (Contd.)

11.2.1 Depreciation on Cost Balance Charge for Disposals / Balance

As At the year Transfers As At 01.04.2010 31.03.2011 Rs.’000 Rs.’000 Rs.’000 Rs.’000

Freehold AssetsMotor Vehicles 9,810 49 - 9,859 Office Equipment 4,945 290 - 5,235 Fixtures and Fittings 10,974 603 - 11,577 Furniture and Fittings 10,747 1,535 12,281 Computer Equipment 26,125 1,094 - 27,219

Leasehold Assets Motor Vehicles - 1,542 - 1,542 Total Depreciation 62,601 5,113 - 67,713

11.2.3 Net Carrying Value 12,285 42,700

12 INTANGIBLE ASSETS GROUP COMPANYFor the year ended 31st March 2011 2010 2011 2010


12.1 Computer Software

CostBalance as at the beginning of the year 44,242 22,806 3,015 - Additions during the year - 4,775 - 3,015 Acquisition of Subsidiary - 16,661 - - On disposal of Subsidiary (16,661) - - - Balance as at end of the year 27,581 44,242 3,015 3,015

12.1.1 In the Course of ConstructionBalance as at the beginning of the year - - - - Incurred during the Year 17,651 - - - Transferred during the Year - - - - Balance as at end of the year - - - - 17,651 - - -

12.1.2 AmortisationBalance as at the beginning of the year 38,072 20,854 594 - Amortisation for the year 2,047 4,406 603 594 Acquisition of Subsidiary - 12,812 - - On Disposals of Subsidiary (15,881) - - - Balance as at end of the year 24,238 38,072 1,197 594 Net Carrying Value 20,995 6,170 1,818 2,421




Rs.’000 Rs.’000 Rs.’000 Rs.’000

12.2 GoodwillBalance at the beginning of the year 71,973 53,503 - - Acquisition of Subsidiaries 203,733 71,973 - -On disposal of Subsidiaries (38,758) - - - Written off during the year (92,584) (53,503) - - Balance as at end of the year 144,364 71,973 - -

TotalNetCarryingValue 165,359 78,143 1,818 2,421

13 INVESTMENT PROPERTIES Balance at the beginning of the year 67,039 12,023 - - Re-classificationofBalance(Note35.3) (40,000) - - -On Acquisition of Subsidiary 36,750 - - -Acquisitions during the year 32,935 67,039 - - Disposals during the year (27,039) (11,761) - - Depreciation for the year - (262) - - Balance as at end of the year 69,685 67,039 - -

13.1 Valuation Details of Investment Property

GROUP

Asian Alliance Insurance PLC

Theinvestmentpropertyhasbeenacquiredon29thJune2010andislocatedatKalalgodaRoad,Hokandaraatanextentof 1 Root & 36 perches.� The property contains one Factory Building with attachments.� The valuation of the property has been donebyMessrsAriyathilake&Co.(Pvt)Ltd.CharteredValuers(UK),atthetimeofacquisition.


The investment property has been acquired during the year and is located at Anamaduwa, Wattala, Veyangoda and Borelasgamuwa.� The valuation of the properties were based on the Directors’ valuation as at Balance Sheet date.�


14 LONG TERM INVESTMENTS


Rs.’000 Rs.’000 Rs.’000 Rs.’000

InvestmentsinSubsidiaries(Note14.1) - - 629,475 355,401InvestmentsinAssociates(Note14.2) 132,440 362,827 583,187 62,204OtherLongTermInvestments(Note14.3) 1,271,095 9,383 - -Total Investments 1,403,535 372,210 1,212,662 417,605

COMPANY 2011 2010

Effective Effective Holding % Rs.’000 Holding % Rs.’000

14.1 Investments in Subsidiaries Non-Quoted

Asia Securities (Private) Limited 100% 182,500 100% 182,500 Asia Growth Fund 1 (Private) Limited 100% 10,050 100% 10,050 Asia Fort Sri Lanka Direct Investment Fund Limited 100% 5,001 100% 5,001 AsiaApparelTrading(Private)Limited(Note14.1.1) 100% 4,000 100% 4,000Capital Reach Holdings Limited 0% - 56.�25% 160,400 Asia Wealth Management Co (Private) Limited 100% 25,000 100% 7,500 Investor Access Asia (Private) Limited 100% 32,000 100% 32,000 Asia Asset Finance Limited 98.�64% 589,047 98.�64% 204,073 847,598 605,524

Provision for fall in value of investments Asia Growth Fund 1 (Private) Limited (10,050) (10,050)AsiaApparelTrading(Private)Limited(Note14.1.1) (4,000) (4,000)Investor Access Asia (Private) Limited - (32,000)Asia Asset Finance Limited (204,073) (204,073) (218,123) (250,123) Total Investments in Subsidiaries 629,475 355,401

14.1.1AccordingtotheSection153(6)(a)ofCompaniesActNo.7of2007AsiaApparelTrading(Private)Limitedhasbeenexcludedfrom the consolidation.� Asia Apparel Trading (Private) Limited had no operations during the year under review and the directors are of the opinion that this company need not be consolidated as the results of such a consolidation to the Group would have no real value to the members of Asia Capital PLC.�



GROUP COMPANY Holding 2011 Holding 2010 Holding 2011 Holding 2010 % Rs. ‘000 % Rs. ‘000 % Rs.’000 % Rs.’000

14.2 Investments in AssociatesQuoted

Asian Alliance Insurance PLC 0% - 41.�75% 139,813 28% 571,187 19% 50,204 - 139,813 571,187 50,204

Non-Quoted Asia Siyaka Commodities (Pvt) Ltd 40% 12,000 40% 12,000 40% 12,000 40% 12,000 12,000 12,000 12,000 12,000 583,187 62,204

Investment at Cost Share of Post Acquisition Profit Net Assets Equity Value of Investments 2011 2010 2011 2010 2011 2010 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000

Asian Alliance Insurance PLC - 139,813 - 119,424 - 259,237 Asia Siyaka Commodities (Private) Limited 12,000 12,000 120,440 91,590 132,440 103,590 12,000 151,813 120,440 211,014 132,440 362,827

In August 2010 the Group acquired a further 29.�2% of Asian Alliance Insurance PLC, hence as a result it became a subsidiary effective from that date .�

14.2.1 Summary financial information for investments in Associates, adjusted for the percentage ownership held by the Group:

Holding Total Total Revenues Profit % Assets Liabilities Rs.’000 Rs.’000 Rs.’000 Rs.’000

2010 Asian Alliance Insurance PLC 41.�75% 1,140,678 924,605 677,077 67,225 Asia Siyaka Commodities (Private) Limited 40% 414,762 297,384 172,778 31,260 1,555,440 1,221,989 849,855 98,485 2011 Asian Alliance Insurance PLC 41.�76% 1,327,264 1,118,762 352,905 30,376 Asia Siyaka Commodities (Private) Limited 40% 443,895 284,135 150,481 17,895 1,771,159 1,402,897 503,386 48,271


GROUP COMPANY 2011 2010 2011 2010

Rs.’000 Rs.’000 Rs.’000 Rs.’000

14.3 Other Long Term Investments InvestmentsinEquitySecurities(Note14.3.1) - 154 - -InvestmentsinDebentures(Note14.3.2) 310,062 - - - Investments in Treasury Bonds 955,033 - - - Investment in Preference Shares - 323 - - InvestmentinJointVenture(Note14.3.3) - 2,906 - - Margin Account 6,000 6,000 - - 1,271,095 9,383 - -

Group No. of Cost Director’s No. of Cost Director’s Shares Value Shares Value 2011 2011 2010 2010 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000

14.3.1 Investments in Equity Securities Non-QuotedCredit Information Bureau - - - 406 154 154 - - 154 154

Group Group No. of Cost Market No. of Cost Market Debentures Value Debentures Value 2011 2011 2010 2010 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000

14.3.2 Investments in Debentures Quoted Sampath Bank PLC - Floating Rate 250,000 25,000 25,000 - - - NationsTrustBankPLC 40,000 40,000 40,000 - - -Singer Sri Lanka PLC 90,000 10,062 9,000 - - - LB Finance PLC 15,000 15,000 14,956 - - - 90,062 88,956 - -

Non Quoted People’s Leasing Company Limited 700,000 70,000 70,000 - - - Commercial Leasing Company Limited 700,000 70,000 70,000 - - - Merchant Bank of Sri Lanka PLC 800,000 80,000 80,000 - - - 220,000 220,000 - - 310,062 308,956 - -

Note:TheaboveinvestmentwasmadebyAsianAllianceInsurancePLCwhichwasacquiredasasubsidiaryduringtheyearended March 31, 2011.�



GROUP COMPANY 2011 2010 2011 2010

Rs.’000 Rs.’000 Rs.’000 Rs.’000

14.3.3 Investment in Joint Venture Balance at the beginning of the year 2,906 - - - Expenses incurred during the year 1,182 2,906 - - Film rights transfer to Asia Digital Entertainment (Private) Limited (4,088) - - - Balance at the end of the year - 2,906 - -

The ownership and all rights of “Flying Fish” Film has been transferred to Asia Digital Entertainment (Private) Limited by the AssetTransferAgreemententeredintoon12thNovember2010betweenAsiaGrowthFund1(Private)LimitedandAsiaDigitalEntertainment (Private) Limited.�

Subsequently expenses incurred on behalf of Asia Digital Entertainment (Private) Limited and Investments made in Flying Fish have been transferred against the amounts due to Asia Capital PLC during the year ended 31st March 2011.�

15 ADVANCE FOR SHARE CAPITAL GROUP COMPANY 2011 2010 2011 2010

Rs.’000 Rs.’000 Rs.’000 Rs.’000

Advance for Share Capital - Asia Asset Finance Limited - - - 200,000 - - - 200,000

Asia Capital PLC has invested Rs.� 200 Mn in shares of Asia Asset Finance Limited through a rights issue during the financial year 31st March 2010.� The shares were allotted during the year ended 31st March 2011

16 LOANS GIVEN TO ESOP GROUP COMPANY 2011 2010 2011 2010

Rs.’000 Rs.’000 Rs.’000 Rs.’000

ESOP Trust Loan 17,491 17,491 17,491 17,491 17,491 17,491 17,491 17,491

NoshareswereallottedfromtheEmployeeShareOwnershipPlan(ESOP)Trustduringtheyear.TheCompanyhasprovidedaninterest free loan of Rs.�17.�5 mn to the ESOP Trust.�


17 LOANS DUE FROM RELATED PARTIES GROUP COMPANY 2011 2010 2011 2010

Rs.’000 Rs.’000 Rs.’000 Rs.’000

Interest bearing long term loan AsiaFortSriLankaDirectInvestmentFundLimited(Note17.1) - - 40,216 40,216AsiaSecurities(Private)Limited(Note17.2) - - 298,905 149,468

Non - Interest bearing long term loan AsiaFortSriLankaDirectInvestmentFundLimited(Note17.3) - - 44,518 44,518 - - 383,639 234,202 Payable within one year - - 31,125 10,499 Payable after one year - - 352,514 223,703 - - 383,639 234,202

17.1 Asia Capital PLC has given loans to Asia Fort Sri Lanka Direct Investment Fund Limited at prevailing market interest rates without any agreed terms of repayments.� However, the lender has confirmed that repayments will not be called within 12 months from the balance sheet date.�

17.2 Asia Capital PLC has given interest bearing advances to Asia Securities (Private) Limited at an annual compound rate of 20% (2010 - 25%) calculated on a basis of a year of 365 days and payable monthly on the first calendar day of each month.�

17.3 Asia Capital PLC has given an interest free loans to Asia Fort Sri Lanka Direct Investment Fund Limited without any agreed terms of repayments.� However, the lender has confirmed that repayments will not be called within 12 months from the balance sheet date.� GROUP COMPANY

GROUP COMPANY 2011 2010 2011 2010

Rs.’000 Rs.’000 Rs.’000 Rs.’000

18 LONG TERM DEPOSITS AND ADVANCESDeposit with the Colombo Stock Exchange 3,500 3,500 - - Rent Deposit 7,922 3,637 7,922 3,637 11,422 7,137 7,922 3,637

19 INVENTORIESReal Estate Stock - 15,848 - - Vehicle Stock 33,118 10,289 - - Consumer Durables - 3,072 - - Food and Beverages 1,817 1,625 - - 34,935 30,834 - -



GROUP COMPANY 2011 2010 2011 2010


20 SHORT TERM INVESTMENTS InvestmentsinEquitySecurities(Note20.1) 1,284,724 142,971 64,584 78,832Commercial Papers - Asia Fort Asset Management Private Limited 18,860 - 18,860 - - Others 337,349 413,856 337,360 413,856 Investments in Fixed Deposits 40,010 108,943 10 10 Investments in Securitized Paper 174,045 - 174,045 6,970 Investments in Terms Deposits 78,713 - - - Investments in Preference Shares 10,000 - - - Investments in Reverse Repurchase Agreements 1,683,148 333,226 611,666 271,630 3,626,849 998,996 1,206,525 771,298Provision for fall in value of investment (18,860) - (18,860) -

3,607,989 998,996 1,187,665 771,298

20.1 Investments in Equity Securities Quoted(Note20.1.1&20.1.3) 1,239,516 103,062 23,605 48,778(Provision) / Reversal for the fall in value of investment 14,758 4,559 20,979 10,054 1,254,274 107,621 44,584 58,832

Non-Quoted(Note20.1.2&20.1.4) 31,450 60,303 20,000 20,000(Provision) / Reversal for the fall in value of investment (1,000) (24,953) - - 30,450 35,350 20,000 20,000

1,284,724 142,971 64,584 78,832

GROUP 2011 2010 No. of Market No. of Market

Shares Value Shares Value Rs. ‘000 Rs. ‘000

20.1.1 Investments in Equity Securities - Quoted Bank, Finance and Insurance HattonNationalBankPLC-NonVoting 638,800 136,958 4,120 577Vanik Incorporation Ltd - Debentures - - 1,200 - Development Finance Corporation of Ceylon PLC - - 2,058 371 CommercialBankofCeylonPLC-NonVoting 50 13 74,400 15,011HattonNationalBankPLC-Voting - - 5,000 940NationsTrustBankPLC 189,100 15,789 - -Asia Capital PLC 2,307,900 113,220 103,400 1,344 Sampath Bank PLC 6 2 - - SeylanBankPLC-NonVoting 1,907,400 93,082 - -Seylan Bank PLC - Voting 100,000 3,930 Housing Development Finance Corporation PLC - - 11,400 1,630 Asian Alliance Insurance PLC - - 31,400 1,735 Capital Reach Leasing PLC - - 275,000 4,194 LB Finance PLC - - 10 - NationalDevelopmentBankPLC - - 11,000 2,310 362,994 28,112


GROUP 2011 2010 No. of Market No. of Market


20.1.1 Investments in Equity Securities - Quoted (Contd.)Diversified Holdings JohnKeellsHoldingsPLC 15 4 7,035 1,294 Ceylon Theatres PLC - - 5,000 270 Richard Pieris & Co PLC 870 12 635,486 34,952 Hemas Holdings PLC 100 5 25 3 21 36,519 Hotels and Travels JohnKeellsHotelsPLC - - 336 - Ceylon Hotels Corporation PLC - - 12,855 1,546 Taj Lanka Hotels PLC 4 0 4 0 0 1,546 Manufacturing Lanka Ceramics PLC 63,400 9,282 63,400 4,232 Dipped Products PLC 1,017,000 121,727 Samson International PLC 10,040 1,004 10,040 871 Ceylon Grain Elevators PLC 504 85 820,304 13,975 ACL Cables PLC - - 38,100 76 Lanka Cement PLC - - 5,000 138 Tokyo Cement Company PLC 2,788,600 112,382 Royal Ceramics Lanka PLC 1,136,000 346,365 Lanka Wall Tile PLC 439,300 63,876 Sierra Cables PLC - - 38,100 80 654,721 19,372 Telecommunications Dialog Axiata PLC 5,500,000 64,750 40,000 280 64,750 280 Construction and Engineering Colombo Dock Yard PLC - - 1,000 283 - 283 Chemicals & Pharmaceuticals Chemical Industries (Colombo ) PLC - - 1,000 68 ChemicalIndustries(Colombo)PLC(Nonvoting) - - 50,400 2,192 2,260 Plantations Bogawanthalawa Tea Estates PLC - - 2,000 73 Beverage, Food and Tobacco The Lion Brewery Ceylon PLC 236,400 44,434 20,000 1,730 Distilleries Company of Sri Lanka PLC 500,000 89,000 - - 133,434 1,730 Units Ceybank Century Growth Fund 200,000 15,298 200,000 8,612 Eagle Growth Fund 100,000 8,298 100,000 4,175 NationalUnitTrust - - 10,000 100 23,596 12,887 Grand Total 1,239,516 103,062



GROUP No of Cost Director’s No of Cost Director’s

Shares Value Shares Value 2011 2011 2010 2010 Rs. ‘000 Rs. ‘000 Rs. ‘000 Rs. ‘000

20.1.2 Investments in Equity Securities - Non Quoted Paradise Coconut Products (Pvt) Ltd - - - 1,053,000 2,625 2,625 Asia Pacific Golf Course Ltd 4 1,000 1,000 4 1,000 1,000 Global Software Labs (Pvt) Ltd - - - 1,632,750 16,328 16,328 Compak (Pvt) Ltd 3,000 70 70 3,000 70 70 Pugoda Textile (Pvt) Ltd 24 1 1 24 1 1 Siedles T V Industries Ltd 2,000 28 28 2,000 28 28 Gem Exports Ltd 700 7 7 700 7 7 Finance House Consortium (Pvt) Ltd 20,000 200 200 20,000 200 200 Platinum Reality Investments (Pvt) Ltd 200,000 30,000 30,000 400,000 40,000 40,000 Pure Beverages Co Ltd 709 44 44 709 44 44

Units NationalUnitTrust 10,000 100 100 - - - 31,450 31,450 60,303 60,303

COMPANY 2011 2010 No. of Market No. of Market


20.1.3 Investments in Equity Securities - Quoted Bank, Finance & Insurance Development Finance Corporation of Ceylon PLC - - 58 10 HattonNationalBankPLC-NonVoting - - 120 17 - 27 Diversified Holdings JohnKeellsHoldingsPLC 15 4 35 6Hemas Holdings PLC 100 5 25 3 Richard Pieris & Co PLC - 625,628 34,410 9 34,419 Hotels and Travels Ceylon Hotels Corporation PLC - - 12,855 1,546 Taj Lanka Hotels PLC 4 0 4 0 0 1,546 Units Ceybank Century Growth Fund 200,000 15,298 200,000 8,611 Eagle Growth Fund 100,000 8,298 100,000 4,175 23,596 12,786 Total 23,605 48,778


A Quantum Leap

COMPANY No. of Cost Director’s No. of Cost Director’s Shares 2011 Value Shares 2010 Value Rs.’000 Rs.’000 Rs. ‘000 2010 Rs. ‘000

20.1.4 Investments in Equity Securities - Non Quoted

Platinum Reality Investments (Pvt) Ltd 200,000 20,000 20,000 200,000 20,000 20,000 20,000 20,000 20,000 20,000

GROUP COMPANY 2011 2010 2011 2010


21 SHORT TERM LENDINGSAsia Couture Limited 336,837 336,837 - 336,837 Less: Provision for Bad & Doubtful Debts (336,837) (336,837) - (336,837) - - - -

22 TRADE AND OTHER RECEIVABLESNon Current LoansandAdvances(Note22.1) 754,343 1,332,474 - - 754,343 1,332,474 - -

Current Trade Debtors 867,307 631,737 238,951 12,348 Less: Provision for Bad & Doubtful Debts (37,772) (35,821) (12,348) (12,348) 829,535 595,916 226,603 - LoansandAdvances(Note22.1) 399,138 1,315,441 - -StaffLoan(Note22.2) 4,886 3,343 310 315LoanstoPolicyHolders(Note22.3) 44,582 - - -Advances and Prepayments 103,577 75,702 2,997 731 Reinsurance Receivables 99,937 - - -Premium Receivables 102,611 - - -Deposits 29,500 8,500 - - Other Debtors 282,135 167,058 64,537 43,008Receivable from Asia Fort Asset Management (Private) Limited 51,546 - 51,546 - 1,947,447 2,165,960 345,993 44,054 Less: Provision for Bad & Doubtful Debts (61,187) (78,530) (38,366) (35,196) 1,886,260 2,087,430 307,627 8,858 2,640,603 3,419,904 307,627 8,858



22.1 Loans and Advances GROUP GROUP 2011 2010 Asia Capital Total Asia Capital Total Asset Reach Asset Reach Finance Holdings Finance Holdings Limited Limited Limited Limited Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000

Non Current Loans and Advances 241,568 - 241,568 175,137 - 175,137 Hire Purchase Receivables 292,070 - 292,070 121,061 753,112 874,173 Lease Receivables 247,723 - 247,723 141,891 269,366 411,257Less: Provision for Bad and Doubtful Debts (27,018) - (27,018) (128,093) - (128,093) 754,343 - 754,343 309,996 1,022,478 1,332,474CurrentLoans and Advances 333,762 - 333,762 265,818 457,888 723,706Hire Purchase Receivables 34,385 - 34,385 23,058 360,722 383,780Hire Purchase Consumer Durables 10,840 - 10,840 10,555 - 10,555 Lease Receivables 81,887 - 81,887 15,404 135,116 150,520 Factoring Debtors 6,777 - 6,777 - 10,238 10,238 Pawning Debtors - - - - 63,591 63,591Less: Provision for Bad and Doubtful Debts (68,513) - (68,513) (19,447) (7,502) (26,949) 399,138 - 399,138 295,388 1,020,053 1,315,441 1,153,481 - 1,153,481 605,384 2,042,531 2,647,915

GROUP COMPANY 2011 2010 2011 2010

Rs.’000 Rs.’000 Rs.’000 Rs.’000

22.2 Staff Loan Balance at the beginning of the year 3,343 4,548 315 304 On Acquisition of Subsidiary 969 - - - On Disposal of Subsidiary - (1,640) - - Loans granted during the year 6,355 3,099 - 315 Repayments during the year (5,781) (2,664) (5) (304)Balance as at end of the year 4,886 3,343 310 315

22.3 Loans to Policy Holders Balance at the beginning of the year - 12,275 - - Acquisition of Subsidiary 30,484 - - - Disposal of Subsidiary - (12,275) - - Loans granted during the year 18,879 - - - Interest Accrued 5,441 - - -Repayments during the year (10,222) - - - Balance as at end of the year 44,582 - - -


23 AMOUNTS DUE FROM RELATED PARTIES GROUP COMPANY Relationship 2011 2010 2011 2010

Rs.’000 Rs.’000 Rs.’000 Rs.’000

Asia Apparel Trading (Private) Limited Subsidiary 4,711 4,711 4,711 4,711 Asia Growth Fund 1 (Private) Limited Subsidiary - - 116,593 162,585 Asia Fort Sri Lanka Direct Investment Fund Ltd Subsidiary - - 179,691 42,527 Investor Access Asia (Private) Limited Subsidiary - - 948 10,250 Asia Asset Finance Limited Subsidiary - - 1,418 2,270 Asia Wealth Management Co.� (Private) Limited Subsidiary - - 2,375 2,336 Asia Leisure Holdings (Private) Limited Subsidiary - - 151,565 58,808 Asia Couture (Private) Limited Subsidiary 18,855 18,855 18,855 18,855 Asia Digital Entertainment (Private) Limited Affiliate 19,361 - 4,462 - Asia Leisure (Private) Limited Subsidiary - - 38,378 16,450 Asian Alliance Insurance PLC Associate - 3,133 4,120 3,133 Asia Tea Packaging (Private) Limited Affiliate 53,314 43,423 53,253 - Anilana Resorts (Private) Limited Affiliate 170 162 - - Asia Fort Asset Management (Private) Limited Affiliate - 70,406 - 70,406 96,411 140,690 576,369 392,331 Less: Provision for Bad & Doubtful Debts Asia Apparel Trading (Private) Limited (4,711) (4,711) (4,711) (4,711)Asia Asset Finance Limited - - - (870)Asia Growth Fund 1 (Private) Limited - - (26,556) (26,556)Asia Fort Sri Lanka Direct Investment Fund Limited - - (42,527) (42,527)Investor Access Asia (Private) Limited - - - (10,250)Asia Couture (Private) Limited (18,855) (18,855) (18,855) (18,855) Asia Fort Asset Management (Private) Limited - (18,860) - (18,860) (23,566) (42,426) (92,649) (122,629) 72,845 98,264 483,720 269,702



24 CASH AND CASH EQUIVALENTS GROUP COMPANY 2011 2010 2011 2010

Rs.’000 Rs.’000 Rs.’000 Rs.’000Favourable Balances Cash in Hand & at Bank 211,523 300,638 12,914 10,035 211,523 300,638 12,914 10,035 UnfavourableBalances Bank Overdrafts (747,609) (431,510) (686,443) (322,637)Cash and Cash Equivalents for Cash Flow purpose (536,086) (130,872) (673,529) (312,602)

25 STATED CAPITAL COMPANY 2010 2011 No of Shares Stated Capital No of Shares Stated Capital

Rs.’000 Rs.’000

Ordinary Shares 110,000,000 1,114,558 110,000,000 1,114,558 110,000,000 1,114,558 110,000,000 1,114,558

26 DEBENTURES

Asia Asset Finance Limited As at 31 March 2011, consisted of 10 unsecured subordinated redeemable 5 years Debentures of Rs.� 1,000/- each issued by the Subsidiary Asia Asset Finance Ltd in the year 2006.�

GROUP Allotment Mature No of 2011 No of 2010 In In Debentures Rs.’000 Debentures Rs.’000 2010 2010 Rs. ‘000 Rs. ‘000

Non CurrentDebenture 2006 2009 - - 10 10

Current Debenture 2006 2009 10 10 - -


27 DEFERRED TAXATION GROUP COMPANY 2011 2010 2011 2010

Rs.’000 Rs.’000 Rs.’000 Rs.’000

Balance at the beginning of the year (1,913) (17,810) - - Acquisition of Subsidiary - (3,758) - - Provision/(reversal) made during the year (9,667) 19,655 - -Disposal of Subsidiary 1,803 - - -Balance at the end of the year (9,777) (1,913) - -

GROUP 2011 2010 Temporary Temporary Temporary Temporary

Differences Tax Effect Differences Tax Effect Rs.’000 Rs.’000 Rs.’000 Rs.’000

On Temporary differences of Property, Plant & Equipment (92,420) (25,534) (116,736) (40,857)On Retirement Gratuity 17,610 4,826 15,329 5,366 On Tax Losses carried forward 120,788 30,485 106,868 37,404 45,978 9,777 5,461 1,913

COMPANY 2011 2010 Temporary Temporary Temporary Temporary

Differences Tax Effect Differences Tax Effect Rs.’000 Rs.’000 Rs.’000 Rs.’000

On Temporary differences of Property, Plant & Equipment (12,238) (3,427) 9,740 3,409 On Retirement Gratuity 2,736 766 (4,926) (1,724)On Tax Losses carried forward 559,600 156,688 (562,561) (196,900) 550,098 154,027 (557,747) (195,215)

Note: Group

Deferred tax assets arising from the temporary differences in subsidiaries other than those from Asia Securities (Pvt) Limited, Investor Access Asia (Pvt) Limited and Asia Asset Finance Limited have not been recognised due to the uncertainty of available future taxable profit for utilisation of such tax losses.�

CompanyDue to uncertainty of availability of future taxable profit for utilisation of tax losses, the recognition of deferred tax asset has been limited only upto deferred liability as at the balance sheet date.� Therefore, the unrecognised deferred tax asset of the Company is Rs.�154 Mn (2010- Rs.�195 Mn).�



28 RETIREMENT BENEFIT OBLIGATIONS - GRATUITY GROUP COMPANY GROUP COMPANY 2011 2010 2011 2010

Rs.’000 Rs.’000 Rs.’000 Rs.’000

Balance at the beginning of the year 24,081 24,555 4,926 4,548 On acquisition of Subsidiary 14,653 6,528 - - Transfer of Liability 23 - (3,983) - Disposal of Subsidiary (10,216) (10,871) - - Interest for the year 490 1,724 51 265 Provision made during the year 15,330 4,273 1,459 1,134 (Gain)/Loss arising from changes in assumptions or (over)/under provision in the previous year 6,801 277 463 1,417 Payments made during the year (6,786) (4,405) (180) (2,438)Balance at the end of the year 44,376 24,081 2,736 4,926

The employee benefit liability of Asian Alliance Insurance PLC is based on the actuarial valuation carried out by a qualified actuary, Mr.� Poopalanathan of Acturial & Management Consultants (Private) Limited.� The employee benefit liability of all other companies in the group are based on the gratuity formula in Appendix E of SLAS 16 - Employee Benefits (Revised 2006) or gratuity formula.�

The principal assumptions used in determining the cost of employee benefits were:

Rate of Interest 9.�15% - 11%Rate of Salary Increase 10%Labour Turnover 3% - 5%Retirement Age 55 - 60

GROUP COMPANY 2011 2010 2011 2010

Rs.’000 Rs.’000 Rs.’000 Rs.’000

29 NON - INTEREST BEARING BORROWINGSBalance at the beginning of the year 144,670 55,505 144,670 55,505 Loan obtained during the year - 89,165 - 89,165 Instalments paid during the year - - - - Balance at the end of the year 144,670 144,670 144,670 144,670 Amount repayable within one year - - - - Amount repayable after one year 144,670 144,670 144,670 144,670

30 INTEREST BEARING BORROWINGS Direct Borrowing 66,529 1,211,166 47,857 43,494 BorrowingUnderCommercialPapers 184,918 115,024 469,661 178,298BorrowingUnderRepurchaseAgreement 1,017,660 558,801 1,017,660 641,802Lease Creditor 13,933 - 13,687 - 1,283,040 1,884,991 1,548,865 863,594 Amount repayable within one year 1,241,316 1,441,897 1,539,501 863,594 Amount repayable after one year 41,724 443,094 9,364 - 1,283,040 1,884,991 1,548,865 863,594


31 INSURANCE PROVISION GROUP COMPANY 2011 2010 2011 2010

Rs.’000 Rs.’000 Rs.’000 Rs.’000

Life Insurance 1,929,352 - - - Non-LifeInsurance(Note31.1) 261,206 - - - 2,190,558 - - -

31.1 Non-Life Insurance Reserve for net unearned premiums 179,999 - - - ReserveforIBNR&IBNER 14,565 - - -Reserve for net deferred acquisition cost (14,462) - - - Reserve for gross outstanding claims 81,104 - - - 261,206 - - -

32 TRADE AND OTHER PAYABLESNon Current Deposits from Customers 105,686 136,923 - - 105,686 136,923 - - Current Trade Creditors 382,837 514,063 - - Claims Payable 76,799 - - - Deposits from Customers 1,203,859 1,717,187 - - Sundry Creditors including Accrued Expenses 446,362 351,341 87,213 99,629 2,109,857 2,582,591 87,213 99,629 2,215,543 2,719,514 87,213 99,629

33 AMOUNTS DUE TO RELATED PARTIES GROUP COMPANY Relationship 2011 2010 2011 2010

Rs.’000 Rs.’000 Rs.’000 Rs.’000

Asia Securities (Private) Limited Subsidiary - - 444,600 232,952 - - 444,600 232,952



34 ACQUISITION AND DISPOSAL OF SUBSIDIARIES GROUP Disposal Acquisition Acquisition 2011 2011 2010 2010 2010

Capital Reach Asian Alliance Capital Reach Taru Villa Asia Wealth Holdings Ltd. Insurance PLC Holdings Ltd. Holdings Management (Pvt) Ltd Co (Pvt) Ltd Rs.’000 Rs.’000 Rs.’000 Rs.’000 Rs.’000

Property, Plant & Equipment & Intangible Assets 76,244 81,784 71,339 359,786 - Investment Property - 36,750 - - - Other Long Term Investments 154 1,351,886 477 - - OtherNonCurrentAssets - - 3,083 - - Short Term Investments 203,512 1,232,372 237,681 - 7,520 Inventories 26,685 - 28,547 1,589 - Deferred Tax Assets 29,456 - 28,849 - - Loans and Advances 2,743,947 - 1,411,788 - - Trade and Other Receivables 152,129 446,390 66,330 13,982 14 Cash and Cash Equivalents 67,504 35,087 43,205 1,411 1 3,299,631 3,184,269 1,891,299 376,768 7,535 Deferred Tax Liabilities 32,984 - 25,292 - -Provision for Retirement Gratuity 10,216 14,653 5,513 1,015 - Borrowings 1,557,979 - 896,536 258,322 -Trade and Other Payables 1,230,985 435,315 599,099 25,241 110 Insurance Provision - 2,212,253 - - - Minority Interest 145,273 - 129,692 - -Bank Overdraft 59,800 22,761 - 2,669 - 3,037,237 2,684,982 1,656,132 287,247 110 NetAssetsAcquired 354,244 132,281 89,521 7,425 Goodwill arising on acquisition 203,733 28,119 5,021 75

Total Consideration 557,977 160,400 94,542 7,500 Cash Received from Subsidiary (12,326) (43,205) 1,258 (1) Net cash flow 545,651 117,195 95,800 7,499

34.1 Disposal of Capital Reach Holdings (Private) LimitedDuring the year ended March 31st 2011 the Company has disposed it’s entire holding (56.�48%) in Subsidiary -Capital Reach Holdings Limited.�

GROUP COMPANY 2011 2011

Rs.’000 Rs.’000

Profit on Disposal of Subsidiary Consideration Received 299,559 299,559 ShareofNetAssetsoftheSubsidiaryasatDisposalDate/CostofInvestment (230,241) (161,206)UnimpairedGoodwill (28,119) - Profit on Disposal of Subsidiary 41,199 138,353


35 GROUP Reclassification of Comparative Information

Current As Reported Presentation Previously 2011 2010

35.1 Loans Due Form Related PartiesInterest bearing Long Term Loan 40,216 - Non-InterestbearingLongTermLoan 44,518 -Loans to Asia Fort Sri Lanka Direct Investment Fund Ltd - 84,734 84,734 84,734

Loans given to Asia Fort Sri Lanka Direct Investment Fund Limited in the previous year was reclassified as Interest bearing Long TermLoanandNon-InterestbearingLongTermLoan.

35.2 Interest Bearing Advances Related Parties

Current As Reported Presentation Previously 2011 2010 Rs.’000 Rs.’000

Non Current Interest bearing Long Term Loan 138,969 - Asia Securities (Private) Limited - 149,468

Current Interest bearing Long Term Loan 10,499 - 149,468 149,468

Interest bearing advance obtained from related party which was classified as current liabilities in the previous year’s financial statements has been reclassified as non-current and current liabilities.�

35.3 Asia Asset Finance Limited

Current As Reported Presentation Previously 2011 2010 Rs.’000 Rs.’000

Rental Receivables on Leases & Hire Purchases 203,187 - Advances and Other Loans 445,079 614,502 Inventories 8,671 - Investment Properties 27,039 67,039 Operating Lease - 2,435 683,976 683,976 Advance for Share Capital - 200,000 Stated Capital 200,000 - 200,000 200,000



36 EFFECTS OF CHANGES IN ACCOUNTING POLICIES.AsstatedinNote3.9intheFinancialStatementsGroupandCompanyadoptedchangestoaccountingpolicyasaresultofelectingvoluntarychange.TheaccountingpolicysetoutinNote3hasbeenappliedinpreparingtheseFinancialStatementsfor the year ended 31 March 2011 and the comparative information presented in these Financial Statements for the year ended 31 March 2010.� In preparing these Financial Statements, the Group and Company have adjusted the amounts reported previously in Financial Statements prepared in accordance with the previous accounting policies.� The changes in accounting policies are made retrospectively.�

An explanation of the effect of changes in accounting policy is set out in the following note

36.1 Group 31 March 2009 31 March 2010 As reported Effect of Restated Effect of Previously Change in Balance Change Accounting in Accounting Policy Policy Note Rs.’000 Rs.’000 Rs.’000 Rs.’000

BALANCE SHEETInvestment in Equity Securities Quoted Shares 20.�1 103,062 4,559 107,621 10,199 103,062 4,559 107,621 10,199

Year ended 31 Year ended 31 March 2009 March 2010 Rs.’000 Rs.’000

INCOME STATEMENT :Other Operating Income 6 4,559 10,199 4,559 10,199

Effect of Changes in Accounting policiesDuring the year ended 31 March 2011, the Group changed its accounting policy with respect to the treatment in valuing the Trading Equity Shares (Quoted) at market value on aggregate portfolio basis rather than lower of cost and market value on an individual investment basis.� This change in accounting policy has been accounted for retrospectively.� The comparative information for 2010 has been restated to conform to the changed policy.� The effect of the change is an increase in Other Operating Income of Rs.� 143,415,000 (2011) and Rs.�10,199,000 (2010).� Opening accumulated losses for 2010 decreased by Rs.�14,758,000 which is the amount of the adjustment relating to periods prior to 2010.�


36.2 Company 31 March 2009 31 March 2010 As reported Effect of Restated Effect of Previously Change in Balance Change Accounting in Accounting Policy Policy Note Rs.’000 Rs.’000 Rs.’000 Rs.’000

BALANCE SHEETInvestment in Equity Securities 20.�1 Quoted Shares 20.�1 48,778 10,054 58,832 10,925 48,778 10,054 58,832 10,925

Year ended 31 Year ended 31 March 2009 March 2010 Rs.’000 Rs.’000INCOME STATEMENT :Other Operating Income 6 10,054 10,925 10,054 10,925

36.2.1 Effect of Changes in Accounting policiesDuring the year ended 31 March 2011 , the Company changed its accounting policy with respect to the treatment in valuing the Trading Equity Shares (Quoted) at market value on aggregate portfolio basis rather than lower of cost and market value on an individual investment basis.� This change in accounting policy has been accounted for retrospectively.� The comparative information for 2010 has been restated to conform to the changed policy.� The effect of the change is an increase in Other Operating Income of Rs.�20,601,000 (2011) and Rs.�10,925,000 (2010).� Opening accumulated losses for 2010 have been decreased by Rs.�20,979,000 which is the amount of the adjustment relating to periods prior to 2010.�



37 RELATED PARTY DISCLOSURES 2011 2010Name of Related Party Name of the Common Nature of Transaction Value of Value of Director Transaction Transaction Rs. Rs.

(a) Transactions with Subsidiaries/Sub-Subsidiaries AsiaSecuritiesPrivateLimited Mr.H.L.L.M.Nanayakkara, InterestfreeFundTransfer 190,501,000 250,815,000

Mr.J.H.PaulRatnayeke, ReimbursementofExpenses 17,402,095 34,199,735 Mr.� Asanga C.� Seneviratne Funds given to settle Liability 75,000,000 - (Resigned w.�e.�f 1st Brokerage on Share Trading 3,350,556 2,460,979 September 2010) Reverse Repo Interest Expense - 1,896,427 Other Interest Expense 116,324 653,323 Interest Bearing Advance Given 128,810,399 (138,969,385) Interest Income on Interest Bearing Advance (57,549,848) 10,499,032 Transfer of Receivable 7,028,590 89,165,985 Transfer of Liability 4,005,701 (89,165,985) CDAXonlineandbackofficecharges (8,098,271) (7,852,989) Dividend received 71,998,976 - Acquisition of Subsidiary (7,500,000) - Disposal of Subsidiary 7,500,000 - Maturity proceeds on Repo Investments 84,482,940 - Disposal proceeds from Property Plant and Equipment 1,525,000

AsiaGrowthFund1 Mr.H.L.L.M.Nanayakkara, InterestfreeFundTransfer (1,645,000) (41,170,900)(Private)Limited Mr.J.H.PaulRatnayeke ReimbursementofExpenses (37,312) (12,284,541) Transfer of Receivable (47,268,079) (89,165,985) Balances settled by Asia Capital PLC on behalf following related parties - Asia Tea Packaging (Pvt) Ltd (2,501,473) - - Asia Digital Entertainment (Pvt) Ltd (966,926) - TransferofInvestmentinJointVenture 3,872,601 -

AsiaFortSriLankaDirect Mr.H.L.L.M.Nanayakkara, InterestfreeFundTransfer (122,000,000) (50,000)InvestmentFundLimited Mr.J.H.PaulRatnayeke InterestIncomeonLongTermLoans 5,541,893 7,735,554 Commercial Paper Borrowings/(Settlements) (2,942,136) Interest Expense on Commercial Papers (11,704,552) (11,192,496) Short Term Lendings/(Recoveries) (12,329,422) Interest Income on Short Term Lendings 9,407,982 8,730,044 Interest Expense on Short Term Borrowings - (27,735) Reimbursement of Expenses 71,801 1,657,375 Amount paid for share investment in Asian Alliance Insurance PLC 46,876,375 - Proceeds received by sale of right issue of Asian Alliance Insurance PLC (42,621,774) - Settlement of Liabilities due to Asia Asset Finance Ltd 5,295,803 -


37 RELATED PARTY DISCLOSURES (Contd.) 2011 2010Name of Related Party Name of the Common Nature of Transaction Value of Value of Director Transaction Transaction Rs. Rs.

(a) Transactions with Subsidiaries/Sub-SubsidiariesInvestorAccessAsia Mr.H.L.L.M.Nanayakkara ReimbursementofExpenses (1,559,591) (951,448)(Private)Limited CDAXonlinetradeandMaintenanceCharges 8,098,271 - Purchase of Property Plant and Equipment (46,055) - Settlement of current account 3,000,000 -

AsiaAssetFinanceLimited Mr.H.L.L.M.Nanayakkara, ReimbursementofExpenses (448,287) (797,885) Mr.� D.�Muthukumarana Repo Borrowings/(Settlements) 21,833,607 80,665,955 Interest Expense on Repo (11,225,105) (6,836,848) Advance on operating lease 1,400,000 - Rentals due on operating lease 404,172 - Interest Free Fund transfers - 625,000 Expenses borne on behalf of Asia Capital Plc - 53,000 Advance In Lieu of Share Investment - 200,000,000 Investment in Shares of Asia Asset Finance Ltd 384,974,062 - Commercial Paper borrowings 30,000,000 - Commercial Paper borrowing repayments (30,000,000) - Interest Expense on Commercial Paper 66,568 -

AsiaWealthManagement Mr.H.L.L.M.Nanayakkara ReimbursementofExpenses 38,900 (2,555,481) Co.� (Private) Limited Interest free Fund Transfers - (160,000) Repo Interest Expense - (281,967)

AsiaLeisureHoldings Mr.H.L.L.M.Nanayakkara(Private) Limited Reimbursement of Expenses 147,400 58,808,394 Interest Free Fund Transfers 21,947,566 - Settlement of Liabilities 92,588,723 -

AsiaLeisure(Private)Limited Mr.H.L.L.M.Nanayakkara ReimbursementofExpenses - 2,840,569 Expenses borne on behalf of Asia Capital Plc - (416,715) Interest Free Fund Transfers 21,947,566 14,026,607

AsianAllianceInsurancePLC Mr.H.L.L.M.Nanayakkara Managementfees 34,688,997 1,800,000 Mr.J.H.PaulRatnayeke, SettlementofCurrentAccount - 1,932,104 Mr.� Asanga C.� Seneviratne Insurance Premium 963,781 (910,664) (resigned w.�e.�f.� 1st Guarantee Fees 1,668 5,004 September 2010) Expenses borne on behalf of Asia Capital PLC 888,611 - Dividends Income 31,990,085 6,274,635 Commercial Paper Borrowing 225,000,000 - Repayment Commercial Paper Borrowing 30,000,000 - Commercial Paper Interest Expenses 10,661,713 - Commercial Paper Interest Payable 4,325,470 -



37 RELATED PARTY DISCLOSURES (Contd.) 2011 2010Name of Related Party Name of the Common Nature of Transaction Value of Value of Director transaction transaction Rs. Rs.

(b) Transactions with Associates AsiaSiyakaCommodities Mr.H.L.L.M.Nanayakkara, GuaranteeFees 1,250,004 1,770,837(Private)Limited Mr.J.H.PaulRatnayeke, DividendIncome 9,000,000 17,666,667

(c) Transactions with Other related partiesCapitalReachLeasingPLCMr.H.L.L.M.Nanayakkara, AmountInvestedinSecuritizedPapers - 26,981,989 Interest Income on Securitized Papers - 1,684,502

P.R.SecreterialServices Mr.J.H.PaulRatnayeke, SecretarialFees (233,059) (195,876) (Private) LimitedAsia Fort Asset Mr.� Asanga C.� Seneviratne Reverse Repo Interest Income - 2,480,149

Management (resigned w.�e.�f.� (Private) Limited 1st September 2010)

Asia Digital Entertainment Mr.H.L.L.M.Nanayakkara ReimbursementofExpenses 374,461 - (Private) Limited Mr.� S.� A.� Abeysinhe Transfer of Receivables 4,088,007 -

Asia Tea Packaging Mr.H.L.L.M.Nanayakkara ReimbursementofExpenses 47,758,226 - (Private) Limited Mr.� S.� A.� Abeysinhe Interest Free Funds Transfer 5,500,000 -

(d) Transactions with other related parties by the Group Asia Securities (Pvt) Ltd AsianAllianceInsurancePLC Mr.H.L.L.M.Nanayakkara BrokerageonShareTrading 17,968,481 8,859,675 Mr.J.H.PaulRatnayake InsurancePremium (258,858) (200,400)

Mr.� S.� A.� Abeysinhe Interest on delayed Settlements - 21,049

AsiaAssetFinanceLimited Mr.H.L.L.M.Nanayakkara BrokerageonShareTrading 1,028,047 126,984 Mr.� S.� A.� Abeysinhe Interest charged on delayed settlements 3,370 172,996

Branch Rent Expenses (241,500) -

AsiaFortSriLankaDirect Mr.H.L.L.M.Nanayakkara BrokerageonShareTrading 617,590 577 InvestmentFundLimited Mr.J.H.PaulRatnayake Interestchargedondelayedsettlements 191,648 56,180

Mr.� S.� A.� Abeysinhe

AsiaTeaPackaging Mr.H.L.L.M.Nanayakkara ReimbursementofExpenses 55,642 - (Private) Limited Mr.� S.� A.� Abeysinhe Fund transfers for donation purpose 2,223,200 -

AsiaWelthManagement Mr.H.L.L.M.Nanayakkara ProfessionalFees (1,081,516) (2,905,134) Company(Private)Limited Mr.J.H.PaulRatnayake ExpensesTransfers 855,747 20,160

Mr.� S.� A.� Abeysinhe

CapitalReachHoldings Mr.H.L.L.M.Nanayakkara BrokerageIncomeonShareTrading 293,991 45,370 (Private) Limited (resigned w.�e.�f.� 20th August 2010) Mr.J.H.PaulRatnayake (resigned w.�e.�f.� 20th August 2010)


37 RELATED PARTY DISCLOSURES (Contd.) 2011 2010Name of Related Party Name of Director Nature of Transaction Value of Value of transaction transaction Rs. Rs.

(d) Transactions with other related parties by the Group AsiaLeisure Mr.H.L.L.M.Nanayakkara TransferofExpenses 3,657,323 - (Private) Limited Mr.� S.� A.� Abeysinhe

AsiaLeisureHoldings Mr.H.L.L.M.Nanayakkara TransferofExpenses 922,645 - (Private) Limited Mr.� S.� A.� Abeysinhe

AsiaDigitalEntertainment Mr.H.L.L.M.Nanayakkara InterestFreeFundTransfers 13,700,000 - (Private) Limited Mr.� S.� A.� Abeysinhe Film Production Expenses 466,350 - Reimbursement of Expenses 731,700 -

PaulRatnayekeAssociates Mr.J.H.PaulRatnayake LegalFees (1,308,349) (952,994)

P.�R.� Secreterial Services (Private)Limited Mr.J.H.PaulRatnayake SecretarialFees (186,464) (240,869)

InvestorAccessAsia Mr.H.L.L.M.Nanayakkara CDAXOnlineTradeCharges 8,098,271 (7,852,989) (Private) Limited Mr.�S.�A.� Abeyesinhe Mr.�Asanga C.� Seneviratne (resigned w.�e.�f 01st September 2010)

Asia Asset Finance Ltd. AsiaSecurities Mr.H.L.L.M.Nanayakkara BrokerageonShareTrading 1,028,047 126,984 (Private) Limited Mr.�S.�A.� Abeyesinhe Interest paid on delayed Settlements 3,370 172,996 Branch Rent Income 241,500 -

AsianAllianceInsurancePLC Mr.H.L.L.M.Nanayakkara InsuranceCommissionReceived 159,000 - Mr.�S.�A.� Abeyesinhe Mr.� D.�Muthukumarana

CapitalReachLeasingPLC Mr.H.L.L.M.Nanayakkara InvestmentinFixedDeposit 40,000,000 - (resigned w.�e.�f 20th August 2010) Mr.�P.�M.�B.�Fernando Interest Received on Fixed Deposit 5,200,000 -

Investor Access Asia (Pvt) Ltd. AsiaSecurities Mr.H.L.L.M.Nanayakkara CDAXOnlineTradeCharges - 7,852,989 (Private) Limited Mr.�S.�A.� Abeyesinhe

Asia Growth Fund 1 (Pvt) Ltd AsiaTeaPackaging Mr.H.L.L.M.Nanayakkara ReimbursementofExpenses 1,645,212 (43,422,313) (Private) Limited Mr.� S.� A.� Abeysinhe Reimbursement of Construction payments of Hokandara Factory 2,200,554 -

AsiaLeisureHoldings Mr.H.L.L.M.Nanayakkara InvestmentinShares - (89,165,985) (Private) Limited Mr.� S.� A.� Abeysinhe

AsiaDigitalEntertainment Mr.H.L.L.M.Nanayakkara JointVentureInvestment - 2,905,675 (Private) Limited Mr.� S.� A.� Abeysinhe Investment made during the year 1,182,332 -

P.R.SecreterialServices Mr.J.H.PaulRatnayake SecretarialFees (72,005) (65,679) (Private) Limited

Asia Leisure Holdings (Pvt) Ltd AsiaSecurities Mr.H.L.L.M.Nanayakkara InterestFreeFundTransfer 4,579,978 - (Private) Limited Mr.� S.� A.� Abeysinhe

Asia Leisure (Pvt) Ltd AsiaLeisureHoldings Mr.H.L.L.M.Nanayakkara InterestFreeFundTransfers (8,892,556) - (Private) Limited Mr.� S.� A.� Abeysinhe Purchase of Property Plant & Equipment 376,400 - Mr.� M.� Galagedara Reimbursement of Expenses 9,370,773 -



37 RELATED PARTY DISCLOSURES (Contd.) 2011 2010Name of Related Party Name of Director Nature of Transaction Value of Value of transaction transaction Rs. Rs.

(d) Transactions with other related parties by the Group AsiaSecurities Mr.H.L.L.M.Nanayakkara InterestFreeFundTransfer 3,657,323 - (Private) Limited Mr.� S.� A.� Abeysinhe

Asia Fort Sri Lanka Direct Investment Fund Ltd AsiaSecurities Mr.H.L.L.M.Nanayakkara BrokerageonShareTrading (617,590) (577) (Private) Limited Mr.J.H.PaulRatnayake Interestchargedondelayedsettlements (191,648) (56,180) Dividend Recevied from Asian Alliance Insurance PLC 13,373,991 -

AsiaAssetFinanceLimited Mr.H.L.L.M.Nanayakkara InterestexpenseonBorrowings (1,221,414) (2,378,201) Loans Obtained/(Loan Settlements) (4,515,703) 10,605,367 Conversion of Short Term Loan to - 9,000,000 Long Term Loan

AsianAllianceInsurancePLC Mr.H.L.L.M.Nanayakkara DividendIncome 25,836,677 7,295,860 Mr.J.H.P.Ratnayake PurchaseofShares (46,876,375) (58,554) Gain on Sale of Right Issue of Asian Alliance Insurance PLC 42,621,774 -

P.�R.� Secreterial Services Mr.J.H.PaulRatnayake SecretarialFees (95,422) (91,496) (Private) Limited

Asia Wealth Management Co. (Pvt) Ltd AsiaSecurities Mr.H.L.L.M.Nanayakkara, ReimbursmentofExpenses (855,747) (20,160) (Private) Limited Mr.� S.� A.� Abeysinhe Interest Free Fund Transfers 1,081,516 2,905,134

Asia Siyaka Commodities (Pvt) Ltd AsianAlliance Mr.H.L.L.M.Nanayakkara PaymentofInsurancePremium 3,798,366 -InsurancePLC Mr.J.H.P.Ratnayake

(e) Transactions with Key Management PersonnelThe key management personnel includes members of the Board of Directors of the Group companies.�

GROUP COMPANY 2011 2010 2011 2010

Rs.’000 Rs.’000 Rs.’000 Rs.’000

Compensation paid to Key Management PersonnelShort Term Employee Benefits 117,649 46,925 29,097 4,517Post Employment Benefit 15,716 - - - 133,365 46,925 29,097 4,517


38 COMMITMENTS AND CONTINGENCIESThere are no material commitments and contingencies outstanding as at Balance Sheet date other than those disclosed below.�

CompanyThe Company has issued corporate guarantees for the bank borrowings by the Subsidiaries/Associates companies as indicated below.�

2011 2010Name of the Company Name of the Bank Purpose Amount Amount Rs. Rs.

Asia Securities (Private) Limited Pan Asia Banking Corporation PLC Over Draft 50,000,000 Asia Siyaka Commodities Bank of Ceylon Over Draft - 5,000,000 (Private) Limited Sampath Bank PLC Over Draft 5,000,000 5,000,000 People’s Bank Over Draft 100,000,000 100,000,000

38.1 Litigations against the Company and GroupAsia Securities (Private) Limited

Description Parties Amount of Claim Rs.

Ms.N.S.CaderhasfiledacaseagainsttheCompanyinCommercialHighCourtforunlawful and wrongful disposal of shares.� The judgment was given against the Company.� However, the company has appealed in Supreme Court against the judgment given by the Commercial High Court.� The Directors are of the opinion that the said appeal will be resolved in favour of the Company.� Accordingly, no provision has been made in the Financial Statements.�

A case has been filed by an employee against the Company for wrongful dismissal.� The Directors of the opinion that the said case will be resolved in favour of the Company.� Accordingly, no provision has been made in the Financial Statements.�

N.S.CaderVs.AsiaSecurities(Private) Limited and Commercial Bank of Ceylon PLC

M.� S.� Salahudeen Vs.� Asia Securities (Private) Limited

15,584,200

1,000,000

39 EVENTS AFTER THE BALANCE SHEET DATE Asia Capital PLC The Company has disposed of its stake in Asian Alliance Insurance PLC and Asia Siyaka Commodities (Private) Limited on 12th August 2011 and 29th

August 2011 for Rs.�2,392,513,920/- and Rs.�175,000,000/- respectively.�

Asia Fort Sri Lanka Direct Investment Fund Limited The Company has disposed of its stake in Asian Alliance Insurance Company PLC on 12th August 2011 for Rs.� 1.�033 billion and the gain on this

disposal is Rs.� 764.�6 million.�

Investor Access Asia (Private) Limited TheCompanyhaschangedofitsnametoAsiaCapitalTechnologies(Private)Limitedwitheffectfrom11thJuly2011.

Asia Asset Finance Limited The Company has made a rights issue of 36,425,715 shares at an issue price of Rs.� 2.�47 per share during the April 2011.�

Asia Securities (Private) Limited The Company has made a rights issue of 20,024,973 shares at an issue price of Rs.� 10.�00 per share during the September 2011.�



40 ASSETS PLEDGED Asia Fort Sri Lanka Direct Investment Fund Limited The following assets owned by the Company have been pledged as securities for liabilities as at balance sheet date.�

Name of the Borrower

Name of theLender

Nature of Facility

Facility Limit

Details ofAssets Pledged

Balance as at31st March

2011 (Rs.)

Asia Fort Sri Lanka Direct Investment Fund Limited


Long Term Loan Rs.� 9 Mn.� 305,085 Shares of Asian Alliance Insurance Company PLC

4,487,297

Asia Capital PLC Bank of Ceylon Overdraft Facility Rs.�250 Mn.� 3,407,115 Shares of Asian Alliance Insurance Company PLC

252,080,237

Asia Securities (Private) Limited Seylan Bank PLC Overdraft Facility Rs.�150 Mn.� 4,900,000 Shares of Asian Alliance Insurance Company PLC

101,944,623

Asia Leisure Holdings (Private) Limited

Name of theLender

Nature of Facility

Facility Limit

Details ofAssets Pledged

Balance as at31st March

2011 (Rs.)

Seylan Bank PLC Long Term Loan Rs.� 150 Mn.� River House property located at Balapitiya in extent of 6 A-IR-36depictedinplanNo.7657

18,452,406


A Quantum Leap

Segment Reporting

Inve

stm

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stm

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20

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20

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20

11

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20

11

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20

11

2010

20

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Rs

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R

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Rs.’

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R

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R

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Busin

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Reve

nue

Tota

l Gro

ss Sa

les

383

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3

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7

848

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3

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2

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5

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8

470

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4

3,961

6

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(40,7

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(12,5

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-

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73,39

5

348

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8

36,69

4

375

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4

78,50

7

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4

70,71

7

43,9

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8

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8

131

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20


Share Information

Total number of shares in issue as at 31.�03.�2011 110,000,000StockSymbol ACAP.N.0000

The ACAP ShareThe Colombo Stock Exchange (CSE) continued its strong growth in year 2010/11 and recorded an impressive growth of 65.�69 percent (compounded return) in All Share Price Index while recording a 46.�26 percent (compounded return) growth in Milanka Price Index.� The CSE is one of the best performing stock markets globally and recognized as the second best performing market by Reuters in 2009.�

The ACAP share closed at Rs.�87.�8 as at 31 March 2011 as against Rs.� 13 in previous year, which is an increase of 191.�01 percent (compounded return).� The share traded between a high of Rs.� 115 and a low of Rs.� 12.�75 in the year under review.�

The ACAP share outperformed both ASPI and MPI during year 2010/11.� The ACAP share was grown by 189.�11 percent (compounded return) giving an attractive return to the shareholders as against the 65.�69 percent (compounded return) and 46.�26 percent (compounded return) increase in ASPI and MPI respectively.�

The ACAP share has continued to be resilient to the volatile trends of the market and reflects a beta value of 1.�08 for the financial year 2010/11 (the beta was calculated on monthly ACAP share and market movements as measured by the TRI for the four year period from 01 March 2007 to 31 March 2011).� The ACAP share grew at a compounded annual growth rate of 171.�82 percent over the most recent five years, whilst the ASPI and MPI grew by 115.�48 percent and 86.�87 percent respectively for the same period.�

Issued Share CapitalThe total number of shares in issue is 110,000,000.�

Audited Audited Audited 2010/11 2009/10 2008/09 Restated

Market cap (Rs) 9,658,000,000 1,430,000,000 632,500,000 Enterprise value (Rs) 11,621,806,000 3,590,543,000 1,617,893,000 Basic Earnings/(loss) per share (Rs.�) 8.�98 2.�00 (4.�04)PER 9.�8 6.�8 (1.�42)Price to book (times) 8.�1 5.�6 13.�00Total shareholder Return - TSR (%) 575.�38 126.�09 (47.�73)

ACAP high & lowshare prices per month

Apr

. - 1

0

May

- 10

Jun.

- 10

Jul.

- 10

Aug.

- 10

Sep.

- 10

Oct

. - 1

0

Nov

. - 1

0

Dec

. - 1

0

Jan.

- 11

Feb.

- 11

Mar

. - 1

1

0

20

40

60

80

100

120

ACAP share performance vs ASPI & MPI indexed

01/0

4/06

01/0

4/07

ACAP

01/0

4/08

01/0

4/09

01/0

4/10

01/0

4/11

0

160

320

480

640

800

ASI MPI


A Quantum Leap

Earnings per shareThe basic earnings per share for the period increased by 349percenttoRs.8.98(2009/10–1.91)asprofitaftertaxattributable to shareholders grew by an impressive rate of 395 percent.� The matters which led an increase in the bottom line are discussed extensively in the “Management Discussion and Analysis” in the Annual Report.�

Total shareholder returnThe total shareholder return (TSR) of the share was 575 percent (Rs 87.�8- Rs 13) during the year.�

Market capitalization and enterprise valueThe market capitalization of the company increased by 575 percenttoRs.9.66billionduringtheyear(2009/10–Rs.1.43billion).� The enterprise value as at 31 March 2011 increased by 224 percent to Rs.� 11.�6 billion as a result of the increase in market capitalization.�

MarketCapitalization

1.12

Rs. B

n.

0.63 1.

43

9.65

10/1109/1008/0907/08

Price earnings ratioThe ACAP share was trading at 9.�8 times earnings as at 31st March2011whichis44percentincrease(2009/10–6.8times)compared to the previous year.�

Price to book value As at 31 March 2011, the price to book ratio of the Group was 8.09times(2009/10–5.57times)whichis45percentincreasecompared to the previous year.�

LiquidityDuring the year, 64.�1 million shares were traded as against 106.�5 shares in previous year.� The average daily turnover during the year is Rs.� 11.�5 million which is an increase of 175.�6 percent compared to the average daily turnover of 4.�1 million recorded in the previous year.�

Share volumes & relative performance vs market (indexed)

Apr

. - 1

0

May

- 10

Jun.

- 10

Jul.

- 10

Aug.

- 10

Sep.

- 10

Oct

. - 1

0

Nov

. - 1

0

Dec

. - 1

0

Jan.

- 11

Feb.

- 11

Mar

. - 1

1 0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

0

160

320

480

640

800

ACAP ACAP ASI

Share Information


Market information on ordinary shares of the CompanyShare Information 2010/11 Q4 Q3 Q2 Q1 2009/10

High 115.�00 115.�00 48.�00 50.�00 38.�25 15.�25Low 12.�75 47.�00 40.�00 26.�00 12.�75 5.�00Close 87.�80 87.�80 47.�00 45.�50 28.�75 13.�00Dividends paid (per share) - - - - - -

Trading Statistics 2010/11 Q4 Q3 Q2 Q1 2009/10

Numberoftransactions 25,440 4,191 2,654 11,712 6,883 5,533Numberofsharestraded 64,103,300 8,443,900 5,415,800 32,215,900 18,027,700 106,562,600Value of the shares traded (Rs) 2,737,450,475 638,272,490 241,115,950 1,317,481,010 540,581,025 1,066,861,475Average daily turnover (Rs) 11,556,048 10,689,488 3,939,683 20,747,801 10,337,678 4,193,050% of total market turnover 1.�71% 5.�66% 2.�33% 10.�54% 8.�61% 1.�96%Market capitalization (Rs) 9,658,000,000 9,658,000,000 5,170,000,000 5,005,000,000 3,162,500,000 1,430,000,000% of total market Capitalization 0.�40% 0.�40% 0.�23% 0.�22% 0.�21% 0.�12%


A Quantum Leap

Ten Year Summary

Year ended 31st March 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002

Rs.’000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000 Rs.'000

(Re-stated) (Re-stated)

OPERATING RESULTS

Revenue 2,122,917 1,328,423 1,803,062 956,048 982,836 743,097 1,678,846 2,636,189 1,552,293 1,477,230

Profit/(loss) before Taxation 981,155 220,500 (395,559) (561,128) 2,229 (395,559) 267,032 251,732 2,747 105,096

Adjustment on disposal of Subsidiary 350,772 78,494 - 206,252 - - - - -

Taxation (180,912) (66,435) 16,373 (16,125) (33,034) (54,346) (17,875) (45,542) (11,396) (22,625)

Profit/(loss) after Taxation 1,151,015 232,559 (379,186) (371,001) (30,805) 65,620 249,157 206,190 (8,649) 82,471

Minority Interest (162,997) (12,600) (65,681) (60,641) (186) (247) - 562 (13,573) (8,275)Profit/(loss) attributable to Shareholders

988,018 219,959 (444,867) (431,642) (30,991) 65,373 249,157 206,752 (22,222) 74,196

ASSETS

Property, Plant & Equipment 401,132 328,038 94,001 94,979 75,843 88,400 168,288 136,885 143,898 156,101

Intangible Assets 165,359 78,143 55,455 49,076 150,088 150,088 150,088 - 33,450 1,209

Investment Properties 69,685 67,039 12,023 12,731 13,438 14,145 - - - -

Long Term Investments 1,403,535 372,210 337,053 433,991 739,732 511,324 411,020 527,243 891,978 1,114,838

Deferred Taxation 9,777 1,913 17,809 129 - - - - -

ESOP Loan 17,491 17,491 17,491 17,491 17,491 17,491 17,491 17,491 17,491 38,023

OtherNonCurrentAssets 765,765 1,339,611 560,766 7,962 14,824 14,824 14,617 16,027 7,775 6,528

Current Assets 5,817,881 3,548,588 3,255,127 3,857,563 2,050,008 3,745,748 2,116,806 974,943 361,784 1,622,917

8,650,625 5,758,033 4,349,725 4,473,922 3,061,424 4,542,020 2,878,310 1,672,589 1,456,376 2,939,616

EQUITY AND LIABILITIES

Stated Capital 1,114,558 1,114,558 1,114,558 1,114,558 1,114,558 1,114,558 1,114,558 1,114,558 1,114,558 1,114,558

Capital Redemption Reserve Fund - - - - 13,800 13,800 13,800 13,800 14,440 13,840

Revaluation Reserve 27,560 8,709 10,437 5,970 - - - - - -

Capital Reserves 5,774 1,790 1,344 1,344 3,174 2,500 2,500 2,500 2,500 9,250

Exchange Equalisation Reserve - - - - 78,316 78,316 (48,467) (22,385) (15,015) (9,290)

General Reserve 3,000 3,000 3,000 3,000 - - - - - -

Retained Earnings/ (Accumulated Losses)

42,744 (856,779) (1,080,850) (635,983) 66,604 89,701 131,722 (114,469) (149,594) 38,968

Shareholders' Fund 1,193,636 271,278 48,489 488,889 1,276,452 1,298,875 1,214,113 994,004 966,889 1,167,326 Pre-operational and Share Issue Expenses

- - - - - - - - (13,338)

Minority Interest 598,549 248,106 194,959 131,945 542 247 - - 6,238 12,521

1,792,185 519,384 243,448 620,834 1,276,994 1,299,122 1,214,113 994,004 973,127 1,166,509

NegativeGoodwill - - - - - - - - 24,302

NonCurrentLiabilities 436,456 748,778 186,067 92,904 91,523 90,119 91,657 78,179 35,449 47,205

Current Liabilities 6,421,984 4,484,871 3,920,210 3,760,184 1,692,907 3,152,779 1,572,540 600,406 447,800 1,701,600

6,858,440 5,233,649 4,349,725 4,473,922 3,061,424 4,542,020 2,878,310 1,672,589 1,456,376 2,939,616


Notes


Notes

Documents

Contents · • 1stArs Independent Katowice IFF • 47th Pesaro International Film Archive • Museum of Modern Art (aka MoMA) • 2nd Saint Petersburg International Film Festival